The upward turn will be slow and tenuous, but it will come. Mid-2010 to early 2011 should mark the arrival of true sustainable recovery and optimism. The local and national economies must return to a growth pattern, particularly employment, if commercial real estate is to substantially rebound. After all, the lifeblood of our industry is the employed workforce.
It really is a question of timing. What some consider the worst two-to-three
quarter stretch in the region’s history may finally be waning.
However, we are well into the full throws of the aftershocks. Commercial real estate is a classic lagging industry and this recession
no different.
A top headline, once again, is the virtual disappearance of the sales market. In the past three years, the sales count has fallen from 61 to 44 to 15 respectively.
Volume over the same time period has gone from $684 million to $358 million to $46 million. There remains a strong disconnect between buyers, sellers, and lenders.
Each has a radically different viewpoint on the market than they did just two years ago, which has resulted in a misalignment of goals, objectives and expectations.
The leasing market does not show this kind of falloff. In fact, leasing totals are relatively stable year-over-year for the past three years. The difference is found in the structure of the leases.
The clear trends are towards shorter terms, increased landlord incentives (free rent, TI, etc), and downward pressure on rental rates and escalations. Large block leases are also more scarce.
For a complete copy of the Richmond report, please contact:
Perry Moss, CCIM, +1 804 200 6463, Perry.Moss@am.jll.com
Alicia Moody, +1 804 200 6418, Alicia.Moody@am.jll.com
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