We would all love to forget about 2008, put it behind us and move on. As 2008 fades into 2009, we will continue to see bumps in the road. Conditions will improve, however, the market has a cleansing period that it will have to endure before the stability of fundamentals is realistic.
Let’s get two things said and out of the way: the last 2/3’s of 2008 was extremely challenging, and 2009 will most likely be a continuation. Vacancies, particularly subleases are up and will rise. Development, leasing velocity, sales activity, rental rates, and absorption are all likely headed down. Major layoffs have been announced at MeadWestvaco, Genworth, LandAmerica, and Circuit City to name a few.
While the quantity of leases was on par historically in 2008, the square footage volume dropped significantly. A clear indication of tenants opting for smaller leases leaving little probability for potential sublease space. Expansions are decreasing while renewals are increasing. Landlords do not have the luxury of turning down small lease offers as the larger ones are extremely sparse.
Contact: Perry H. Moss, Regional Director, Research, 804 644 4066, email@example.com