Commercial Real Estate Resources for Savvy Corporations
For many of us, 2013 ended up closing with less than stellar results. Will 2014 be a better year? We share our perspective on why 2014 may be a better year for the commercial real estate market.
Currently I have been working on several purchase requirements and as I read a recent article from our Research Director I found it very relevant. In the article, Garrick Brown discusses some of what is happening in the investment markets. I would agree that investors are both looking for yield but they are also still very adverse to risk. This is still creating a lot of demand for core assets. If you are willing to take risk then you’ll look outside of the core to increase your yield but if you are not willing to take risk then it can be difficult to achieve an acceptable return. For a good read on some current trends in the investment market, read the enclosed article on Searching for Yield…
Job growth is the number one drive of Commercial Real Estate. For the last two months, we’ve been sending out updates on what the U.S. employment market looks like. In March, we gave a more detailed report while April gave a different perspective on where that growth was happening. We found it interesting to see which markets are producing new jobs.
Demand for office space surged in the fourth quarter of 2012 posting the strongest quarter of demand for office space since pre-recession 2007. The job numbers have been healthy for quite some time but it wasn’t till the fourth quarter did we see the demand play out. Given the fiscal cliff scenario, the fear of a relapse into recession may be behind us. Asking rents rose 1% when compared to Q4 2011. While this is still a tenant’s market, vacancy is eroding. We estimate that we still need to decrease another 200 bsp before landlords can really push rents. The national rent growth is being pushed by a hand full of West Coast, tech-driven markets as well as the New York City market. Furthermore, we are seing companies functioning on less space per employee. That number has declined from 225sf to 176sf per person in 2012. We estimate that this could fall to as little as 151sf per person by 2017.
On Friday December 14th, Cassidy Turley released research examining the impending “fiscal cliff’s” impact on commercial real estate markets across the country. In this post, the fiscal cliff is defined and several scenarios are discussed. We also take our market research platform and discuss the impact to 30 different markets across the country. You can download the report by following the link or you can read the summary in this post. As always, let me know if you have any questions or comments.
Cassidy Turley Northern California has just released our Fall 2012 Single Tenant Net Lease Investment Report. This report tracks national trends within the commercial real estate investment market with a special focus on single tenant net lease properties. Understanding the sale market and value that your lease has on a building can shed light on your next lease negotiation…
Cassidy Turley’s Chief Economist Kevin Thorpe recently spoke on a company webcast. Mr. Thorpe covered Cassidy Turley’s perspective on the U.S. Economic & CRE Outlook. The presentation was titled, “A Big Fat Pause in the Recovery.” In this post, I summarize what was covered and provide a link for you to listen to the presentation.
“What are you seeing in the market?” is the question that I hear the most from my clients. An excellent midyear status check up can be found in our U.S. Macro Update which was just released by Cassidy Turley’s Chief Economist, Kevin Thorpe. This blog post summarizes that report.
NASA just finished its latest effort, a 50,000 sf office building at the Moffett Field Ames Research Center in Sunnyvale, California. It is being advertised as the “greenest” federal building. For years now, commercial office buildings have been the focus of sustainability groups and the next big push for making our world a more environmentally friendly place to live and work. It is true, there is a lot of energy to be saved and we can still improve upon the standards we all live by in our commercial buildings. NASA may have just set the bar for all of us.
With the volatility in the stock market last week, many of us are wondering what’s next. I’ve been writing about the increase in jobs in the economy and the venture capital boom as fundamentals pointing toward a slow but steady climb out of the recession. What should we do then with the downgrade of our U.S. credit rating and wild stock market activity last week? Should we hunker down and stop spending altogether or continue to move forward making business decisions as wisely as we can?