Cushman and Wakefield recently published their Winter 2009 Office Space Forecast and it's not a pretty picture. Basically, it is what we would expect with this economy. Office space occupancy in the CBDs will continue to deteriorate due to employment reductions throughout the the US. This will occur even as the economy starts it's rebound.
No surprise that they are also predicting sublease space offerings to continue their uptrend.
According to the report, rental rates will begin their descent and bottom out by year end 2010. With vacancies increasing they are predicting that the gains made in rental rates over the past 3 years will be wiped out.
"Manhattan, San Francisco and Orange County CA could see rates dropping as much as 20.0% from 2008 levels. Meanwhile, energy-producing markets like Houston will remain bright spots (though not necessarily for long if oil and gas prices continue to fall), as they are expected to eke out modest rent gains throughout this economic downturn." They also predict that Boston, Philadelphia, Washington, DC and Seattle will weather the current downturn much better than other markets. While new York and New Jersey are expected to be the weakest and slowest to recover.
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