No. Not the NY subway, but the sandwich shop. Talk about great branding and a captive audience. Subway sandwiches has opened a shop at the top of One World Trade Center for the construction workers. As the building rises, so will Subway. See it on YouTube.
Have you ever wondered how office space leasing varies from country to country. Are the standards for lease term and rental rates calculations the same in London, Paris, Sydney or Moscow as they are in New York, Chicago or Los Angeles? How about options to renew. What are the standard guidelines in each country? As an example, Greece has a standard of a 12 year lease, but there is an escape clause after 2 years...
If you have ever been curious bout how different countries lease office space, Colliers International has published their 2010 Worldwide Office Leasing Guidelines that reviews how office leasing is done in 58 different countries and is available for download.
It seems as though it has been a couple of weeks of good news for the US office space market. CoStar has just come out with their State of the U.S. Office Market: Mid-Year 2010 Review & Forecast.According to their study, office space vacancy rates have stabilized and office vacancy rates that appear to have peaked and are no longer on the rise .
A few notable points from the report:
Office job growth has spurred positive net Office Space absorption. Office Vacancy Rates have peaked with some office markets even reporting Increases in average office Rents.
Of the 20 largest office markets, eight of them posted positive net absorption so far this year, three of them had little or no change, but nine did post negative net absorption. Washington DC led the country with 2 million square feet of net absorption followed by Denver with 1.6 million and Minneapolis with 1.3 million. New York City had 2.8 million square feet of negative net absorption, Los Angeles with a negative 2 million and Philadelphia at negative 1 million. But even the markets experiencing negative absorption were doing so at much reduced levels compared with last year.
New York, Long Island and Minneapolis office space markets are all now reporting single-digit office space vacancy rates of 9% or less.
If the current pace of office space absorption and delivery trends hold, CoStar projects the office vacancy rate will go from 13.6% to less than 11% sometime in 2013.
From a commercial real estate perspective, as long as you have any net job growth, it is eating away at the vacancies out there. The most important thing here is that this positive employment growth in the office sector will be reducing standing inventories of (available) space.
This is the second recent report of positive news in the Office Space arena. Just a few days ago we posted Office Space Vacancy Rates in US CBDs Fall Slightly, now this. Hopefully it will be the first few of more to come.
WASHINGTON, July 12 /PRNewswire/ -- For the first time in two years, the demand for office space exceeded what was returned to the market, according to Cassidy Turley's latest National Office Trends Report.
Cassidy Turley reports that with demand up, national office vacancy rates remained flat when compared to the previous quarter at 16.9%. Still, this is the highest vacancy has been since 1993. Of the 80 major metros tracked, 40 posted increases in vacancy and 35 markets posted declines.
According to the report, national rents are stabilizing, but not appreciating. Average asking rents fell slightly, down $0.17 compared to the pervious quarter, to register at $21.56 in the second quarter of 2010.
"In terms of recovery in the office market sector the fundamentals have improved, the demand has improved - especially in Washington, DC, New York City, and pockets of California," said Kevin Thorpe, Chief Economist at Cassidy Turley. "These are the segments of the market that are clearly outperforming the rest of the country. Investors are targeting quality assets in these markets and pricing has moved up dramatically from the low point it hit in 2009."
According to Cassidy Turley, the U.S. economy created 116,000 office-using jobs in the second quarter of 2010. However, recent economic data suggests that the economy may be losing steam as we enter into the second half of 2010. Private sector job creation, in particular, has been disappointing in the May and June employment reports. Even under bullish economic scenarios, unemployment will not reach pre-recession levels prior to 2013.
Cassidy Turley reports that U.S. office sales volume is up 39% compared to this same period one year-ago – at $7.42 billion. Net absorption was positive 6.6 million square feet in the second quarter of 2010, marking the first period of positive demand since the first quarter of 2008.
The report also finds that the development pipeline has slowed dramatically. There is currently 32.8 million square feet under construction, compared to 41 million square feet delivered in 2009 and 61.1 million square feet delivered in 2008.
"The growing uncertainty regarding the recovery and surrounding the regulatory environment will slow the recovery in the office sector, but it will not derail it," added Mr. Thorpe. "Office-using job growth will continue to be slow in 2010, but as businesses regain confidence in the self-sustaining expansion, hiring will pick up in greater numbers in 2011 in order to keep pace with growing demand. For the office market, 2010 will be the year of positive demand for office space, 2011 will be the year of stabilizing vacancy, and 2012 will be the year of rental appreciation."
Bloomberg July 8, 2010 - Office space vacancies in U.S. central business areas fell in the second quarter from the prior three months, the first drop since 2007, as companies hired workers and took advantage of lower office space rents, Cushman & Wakefield said.
The average vacancy rate in central business districts fell to 14.8 percent from 15 percent at the end of the first quarter, the New York-based broker said today. Sixteen of the 31 cities tracked by Cushman had declines in vacancies, the company said.
“Markets throughout the U.S. continue to strengthen, as it becomes strongly apparent that the national vacancy rate for CBDs has peaked,” Maria Sicola, executive managing director and head of Americas research for Cushman, said in a statement.
Office vacancies in both central business districts and suburban areas rose to 17.4 percent in the second quarter, the highest since 1993, New York-based research company Reis Inc. said July 6. Cushman’s figures are for central business districts in cities including New York, Washington, D.C., Philadelphia, Boston and San Francisco.
Some office landlords cut their rents to fill space, Cushman said. The average rent fell to $36.49 a square foot from $36.88 in the first quarter. Nineteen of the 31 districts covered in the survey had quarterly declines in rates and 13 of those had drops of less than 3 percent, a smaller decline than in past quarters, Cushman said.
‘Nearing Bottom’
“While there is still substantial competition among landlords to offer the best deal to prospective tenants, rental rates are nearing a bottom in several markets,” Sicola said.
The U.S. has added 882,000 jobs since the beginning of the year, according to the Labor Department. The drop in office vacancies in the second quarter followed nine straight increases dating back to the last three months of 2007, when the rate bottomed out at 9.7 percent, Cushman said.
Manhattan’s three submarkets -- Midtown, Midtown South and Downtown -- had the lowest vacancy rates among the central business districts tracked by Cushman. Midtown South’s vacancy rate fell to 9.3 percent from 9.9 percent in the first quarter, Downtown’s rate was little changed at 9.9 percent and Midtown’s rate declined to 11.5 percent from 12.6 percent.
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Have you ever wondered how office space leasing varies from country to country. Are the standards for lease term and rental rates calculations the same in London, Paris, Sydney or Moscow as they are in New York, Chicago or Los Angeles? How about options to renew. What are the standard guidelines in each country? As an example, Greece has a standard of a 12 year lease, but there is an escape clause after 2 years...
