ATLANTA, GA (April 17, 2012) – The U.S. office market isn’t exactly setting the world on fire, but its recovery is well under way.
That was one of the points made by guests and show host Michael Bull on the most recent episode of the“Commercial Real Estate Show,” which provided an in-depth look at the sector’s performance in first-quarter 2012.
The national office vacancy rate fell 10 basis points to 17.2 percent during the first three months of the year, while asking and effective rents rose by .5 percent and .6 percent, respectively, said Ryan Severino (top right photo), a senior economist for Reis. The vacancy rate has now declined for four consecutive quarters, and rents have increased for the past six quarters.
“While this isn’t the breakneck pace that I think we would all like to see, it’s clearly another step in the right direction,” Severino said.
Generally speaking, office properties in primary markets are performing better than those in secondary and tertiary areas, while demand in suburban regions has picked up noticeably in recent quarters, Severino noted. The office markets in cities with a large concentration of technology firms – such as Boston, San Francisco and Seattle - are doing particularly well, he added.
As for 2012, prepare for more of the same, Severino advised. “I expect this slow, steady convalescence that we’re in the middle of to continue,” he said.
The presidential election could have an impact on demand for office space, Bull noted. “It sure seems that with a lot of the people we talk to – if there’s a more pro-business administration in the White House, they would seem to be a lot more excited about expanding and hiring,” he said.
Guests also discussed a variety of tips for landlords and tenants in today’s market.
Casey Keitchen (lower left photo), a vice president with Bull Realty’s National Office Group, urged tenants to move quickly to take advantage of current conditions. “Tenants really need to lock down these rates and these concessions while they have them,” he said. “They’re not going to be around forever. We’re already seeing a pullback to some extent.”
Landlords need to spend the time and energy to make sure their properties are always ready to show prospective tenants, said Harry Conley, CEO of Seven Oaks. “You really have to take advantage of every opportunity to show your space,” he noted.
It’s also a big mistake for landlords to wait “until the lease is about to expire before they embrace their tenants,” observed Andrew Zezas (lower right photo), CEO of Real Estate Strategies Corp. “From the day the tenants move in, that’s when [the best landlords] start servicing their customers, and those are the landlords that are experiencing the highest retention rates,” he said.
The next “Commercial Real Estate Show” will be available April 19 and will provide an update on the U.S. retail market.
Contact:
Stephen Ursery
Wilbert News Strategies
E-mail: sursery@wnspr.com
Office: (404) 965-5026
Cell: (404) 405-2354
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