Posts Tagged ‘CB Richard Ellis’

Downtown Chicago Office Market Showing Signs of Life

Tuesday, October 12th, 2010

Downtown Chicago Class A office vacancies now just 14.2 percent. Chicago’s downtown office market started its long-awaited recovery in the 3rd quarter, with a slight decline in the vacancy rate reported following seven consecutive quarters of decline.  According to statistics provided by CB Richard Ellis, the vacancy rate fell to 17 percent from 17.3 percent across all property types.  Class A space has the lowest direct vacancy rate at 14.2 percent, and totals 6,900,000 SF.  Class B vacancies total 15.9 percent, or 8,900,000 SF.  Class C space reports a 15.3 percent vacancy rate, or 3,500,000 SF.

This is cautious but good news for building owners.  “Armageddon has passed us,” said John Dempsey, a senior vice president with CB Richard Ellis.  “We’re not happy about how things are today, but we’re looking down the road and seeing things are getting better.”  He noted that electronic trading firms are currently dominating the market, with companies looking at upper tier Class A office buildings.  During the 3rd quarter, demand – measured by net absorption – was positive for the first time since the end of 2009.  A couple of significant deals completed during the 3rd quarter helped the market, such as the Getco LLC lease to double its space in the former Apparel Center at 350 North Orleans Street.

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European Nations Look Into Selling Public Assets to Resolve Debt

Thursday, July 22nd, 2010

European nations look into selling public buildings to pay down debt. Debt-laden European governments seeking ways to raise money are considering the possibility of selling public properties such as office buildings.  Countries considering selling assets include Germany, the U.K., France and Greece, all of which were hit hard by the global banking crisis.

“It is clear that several European governments are looking to secure disposals on a large scale,” noted Richard Holberton, a CB Richard Ellis director.  Although Holberton says it’s not clear what effect these sales would have on government funds, “their impact on real estate markets could be a lot more significant.”  Government-owned assets comprised between two and 2 ½ percent of all European public sales since 2006.  That could double this year, according to CBRE, and could account for four percent of the €100 billion — $125 billion – that will be sold this year.

Although some properties are expected to attract significant purchaser interest, some government buildings won’t sell so easily.  Surplus office buildings could be in undesirable locations, for example.  Prime assets that are still occupied by government offices will have far more appeal to investors.  “Where assets are well located, of good quality, and continue to produce income from occupation by a public-sector tenant, this generates an income stream that is attractive to investors,” Holberton said.

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Washington, D.C., Office Market Showing Signs of Stabilization

Wednesday, February 3rd, 2010

Washington, D.C., office vacancies shrank by 715,384 SF during the fourth quarter of 2009.Washington, D.C. office leasing is on the upswing for the first time in a year.  Not surprisingly for the District, the rise in leasing activity is driven primarily by expanding federal agencies. A study by CB Richard Ellis of fourth quarter leasing activity showed that the private sector is again leasing space they had subleased in late 2008 and early 2009, a sign that they might be on the verge of rehiring laid-off employees.  According to the report, the amount of vacant space shrank 715,384 SF during the fourth quarter.  That is a major change from the third quarter, when vacant space grew by 375,558 SF.

Vacancy rates reached a  high of 11.8 percent last year, thanks to the region’s net loss of 24,000 jobs and new office buildings coming on line.  Now, commercial real estate brokers are seeing new interest from law firms, associations and financial service firms wanting to lease space.  Some are planning for future growth, while others are taking advantage of large discounts being offered to attract new tenants.  “We have clients call and say maybe this is the time to go into the market and see what’s available,” said Ernie Jarvis, managing director of CB Richard Ellis’ Washington office.

Approximately 32 percent of commercial leases are with the federal government, an increase over the 21 percent reported in recent years.  In normal years, the government has three of the top 10 transactions in the region; that rose to eight in 2009.  These include 802,000 SF leased by the Department of Health and Human Services in Rockville, MD; 503,000 SF leased by the Drug Enforcement Administration in Pentagon City, VA; and 360,000 SF leased by the Nuclear Regulatory Commission in North Bethesda, MD.

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