The Real Deal March 31, 2011 Office rents and absorption will rise over the next two years in urban and suburban business districts, according to Cushman & Wakefield's office market forecast released today. Though office rents remain low in the U.S., the report determined that a lack of new supply coupled with rising demand will force rents upward in half of all central business districts - or urban business centers - by 2013. And while 2010 saw just 2.2 million square feet absorbed in cities, by 2012 that number should grow more than six-fold to 13.9 million square feet. New York City will lead the charge, along with Washington D.C., Boston, Seattle and Chicago, as those areas will combine to account for nearly two-thirds of that space. Suburban office vacancies will also decline between now and 2013, but at a slower rate than those of central business districts. Almost half of all suburban markets will see office rent declines between now and 2013, and five areas - including Miami - will see office rents dip below 2010 bottoms.

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Boston is a city which boasts a great deal of American history and showcases it well. It’s one of the locations where our ancestors fought for and eventually won the right to practice free enterprise. Today, Boston’s commercial real estate and office space available for purchase or lease are evidence that free enterprise is alive and well in Boston.

Of course, this city suffered some set backs as a result of the economic problems that have recently faced America. This resulted in overall Boston metro office space vacancies of 14.2 percent in 2010, up from 12.8 two years previous.  This makes it a good time for any small business wanting to expand in the Boston market or wanting to relocate their office. The slightly higher than normal office vacancy rate provides many desirable Boston area commercial office locations from which to choose a place to house your business.

In the downtown area, commercial real estate, Class A & B, showed wide variances in commercial vacancies, from 11 percent in the Financial District to abut 26.5 in the Seaport.  Vacancies in commercial, non-industrial real estate along Route 128 indicated 16.1 percent while the I-495 market corridor reached 19.4 percent. The core downtown area has approximately 50,536,702 square feet of commercial and office space in the lease market. The Seaport and peripheral downtown areas offers 21,205,209 square feet of space in the lease market, making Boston metro’s commercial and office space equal to about 71,741,911 square feet.

Office space rental rates in Boston remained stable during the final two quarters of 2010. Class A space averages $32 per square foot per year while Class B rents average $21 per square foot per year.

Boston offers employees of companies, both small and large, wonderful multi-cultural experiences. The historic sites in the Boston area provide many fun educational opportunities for families. The proximity to New York and Washington D.C. offer even more delightful opportunities to explore and experience life along the Eastern Seaboard.

Some of the finest schools and universities are available for educating children and young adults in this area. Harvard is probably one of the most renowned institutions of higher education in America. There are also state and community colleges available for two- or four-year degrees and post-graduate work.

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A recent article on Bloomberg.com discussed the impact of "Shadow Space" on the recovery of the office space market. The officeFinder Blog discussed the affect of "Shadow Space" on the market back in April 2010. We defined it as "Shadow Office Space is office space that is currently under lease by a tenant, but which is not being used due to layoff of employees." Here is what the Bloomberg article had to say:

"The U.S. office sector will be the slowest to recover as companies absorb empty space and advances in technology reduce the need for square footage, said Kenneth Rosen, a professor at the University of California, Berkeley.

Unoccupied “shadow inventory” accounts for 3 percent to 5 percent of total business leases, and that space will be filled before firms sign new rental agreements, Rosen, chairman of Berkeley’s Fisher Center for Real Estate and Urban Economics, said at a conference in San Francisco. Cloud computing and other tech advances let employees work away from offices, further reducing space needs, he said.

“Every company has shadow space,” Rosen, who also runs Berkeley-based hedge fund Rosen Real Estate Securities LLC, said in an interview yesterday. Most U.S. cities face prolonged vacancies because of the surplus, excepting Washington, New York, San Francisco, Boston and parts of the Silicon Valley, where technology and venture capital spur leasing, he said."

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Phoenix Business Journal Friday, February 26, 2010 (Excerpts) - Karen Mills was sworn in as head of the U.S. Small Business Administration last April, just as the economic stimulus bill was starting to revive the SBA’s lending programs. Now she is pushing President Barack Obama’s jobs plan, which calls for increased lending to small businesses, tax breaks for hiring and business investment, and programs to help innovative businesses grow.

Mills sat down Feb. 18 with Kent Hoover, the Washington Bureau chief of American City Business Journals, to talk about increasing small businesses’ access to capital...

...We have a program called 504. It’s for owner-occupied real estate, if you expand and create jobs. Temporarily, let’s use 504 to do owner-occupied real estate refinancing -- not the bad stuff, not the speculative portfolios that have been accumulated; but owner-occupied, and you haven’t gone into default. It’s probably less risky than funding an expansion. It looks like we can do it for zero subsidy; we’ll charge a fee to take on the risk, and we’ll need a little administrative oversight. We think we can do $7 billion to $10 billion at very little or no cost to taxpayers.

We have the infrastructure to do that right now. We know the demand is going to be there. (end)

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January 8, 2010 WSJ - The office market in Washington, D.C., is poised to topple New York as the nation's most expensive, reflecting the declining fortunes of the nation's financial center and the government expansion under way in the U.S. capital.

Rents declined in almost all of the 79 American cities tracked by Reis Inc., a New York based-research firm, in the fourth quarter of 2009. The largest fall was in New York, where average effective rents -- or the net amount tenants pay after landlord concessions -- fell nearly 20% to $44.69 per square foot annually. It was the sharpest decline in rents ever recorded by Reis since it began compiling data in 1981.

By contrast, average rents in Washington were $41.77 per square foot, down 3% annually. Reis estimates that by the end of this year, rents in New York will come down to around $41.07, slightly below their estimates for Washington of $41.27.

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