Need Office Space for Lease or Sale? OfficeFinder can Help find your next Office. Leasing Office Space Buying Office Space Membership Online Toolkit OfficeFinder Advisor

Entries Tagged as 'Office Space'

Worst to come in U.S. commercial real estate

No Comments »

NEW YORK, Feb 1 (Reuters) - The worst may not be over for commercial real estate loans as vacancies remain high and rents decline, threatening the financial system with substantial losses, Standard & Poor's said on Monday.

"The fallout from commercial real estate exposures for banks has yet to run its course, in our opinion," S&P said in a report.

Although problems are already evident in the homebuilding and commercial construction sectors, they have yet to be felt in the larger mortgage lending and multifamily sectors because interest rates are low and cash flows are adequate to service debt, the rating agency said.

However, as interest rates rise and rent rolls decline further, delinquencies will rise and prices will fall further in these sectors as well, S&P said.

"Even though most highly exposed banks with weaker balance sheets are already rated below investment grade, more downgrades are possible," S&P said. Indeed, S&P already has negative outlooks on about 75 percent of the rated banks with the largest commercial real estate exposures, indicating they are at risk of a downgrade.

Despite the potential for heavy losses, however, most banks' capital is sufficient for them to pull through as long as the losses are realized over a few years and liquidity is maintained.

"Commercial real estate exposure generally tends to represent a higher proportion of smaller, largely unrated community banks' exposures," S&P said. "Therefore, there is a greater proportion of risks in the unrated banking sector.

Buying Office Space , Office Building Sales , Office Space , Office Space Negotiations , Office Vacancy Rate

Subleasing Office Space Can Be Risky If You Are Not Careful

No Comments »

With all of the available office space available throughout the country And the economy still in the dumpster, many business are looking towards subleasing as a way to save money on their office rent. In almost every case a tenant can save anywhere between 10% and 50% off the current market rents through a sublease. It sounds like a good deal and in many cases it is, but as in all investments the return (savings) is related to risk. Subleasing space is a risky proposition.  One in which it is very important to have a qualified expert assisting you to make sure you avoid costly mistakes or even worse, potentially cause your business to go under.

What are the risks?

First and foremost, what happens if the former tenant sub-landlord goes bankrupt? Most leases have a clause in them cancelling the lease or giving the landlord the right to cancel the lease if the tenant declares bankruptcy. If this happens and you do not have any protections, you will either be out on the street or paying higher rents.

What happens if you are paying rent to the former tenant sub-landlord, but they are not paying the landlord the full amount of the rent due? They are in default of the lease and therefore you are too.  What happens if the landlord decides to give them the boot? Will you be able to stay in the space at the same rate you are currently paying?  There is no guarantee that your sub-landlord will fulfill their obligation to pay the remainder of the rent or even the rent you pay to them to the landlord.

Although rare, hazardous waste can be another issue, especially if there is land involved. If your sub-landlord caused any hazardous waste, you could find yourself liable to clean it up. Cleaning up hazardous waste is not cheap.

There are ways to protect yourself when you are subleasing office space, but each sublease brings on different nuances that will need to be handled uniquely. A good real estate professional, such as the ones we have with OfficeFinder, will be able to mitigate the risks for you through a number of different means. The most important one would be a no-disturbance agreement signed by the Landlord and notarized. Not all landlords will agree to one, so other means of protection will need to be developed.

If you decide to sublease office space, make sure you protect yourself by partnering with a qualified real estate professional. You will be glad you did.

Office Relocation , Office Rental , Office Space , Office Space Negotiations , Sublease Office Space

CBRE Econometric Advisors Sees Q3 2009 as Market Bottom for U.S. Commercial Real Estate Total Returns

Returns are Expected to Remain Negative in 2010, With Positive Value Growth Foreseen in 2011  


Boston – January 11, 2010 – The downward slide in total returns from U.S. commercial real estate reached bottom in Q3 2009, but returns will remain in negative territory for most of 2010 before resuming positive growth in 2011, according to a new analysis from CBRE Econometric Advisors (CBRE-EA, formerly CBRE Torto Wheaton).

As measured by the NCREIF1 Property Index, total returns have declined 23% for office, 21% for industrial, 15% for retail, and 23% for multifamily compared with peak levels in 2007. CBRE-EA believes that these declines constitute the bottom of the current cycle across all property sectors, and in the firm’s base-case (most likely) scenario, returns are expected to improve, but remain in negative territory throughout 2010.  By the end of 2011, CBRE-EA sees commercial property producing total returns of 3% to 11%.

Total returns comprise the change in the market value of commercial property (appreciation or depreciation), plus cash yields (income)

Entire Article

Buying Office Space , Office Space , Office Space Negotiations

Manhattan Office Leasing Vacancy Rate Down to 11.1%. Has The Bottom Been Reached?

No Comments »

Jan. 12 (Bloomberg) -- Manhattan has 38 percent more office space for rent than a year ago as Wall Street job cuts and a weak economy reduced demand, Cushman & Wakefield Inc. said. The vacancy rate in the fourth quarter was unchanged from the third.

Available space totaled 43.8 million square feet at the end of 2009, compared with 31.8 million a year earlier, the New York-based brokerage said today in a report. That’s equivalent to 11.1 percent of Manhattan’s office space, the same as at the end of September, according to Cushman.

“We’re calling this close to the bottom,” said Joseph Harbert, Cushman’s chief operating officer for the New York region. “Rents will go down a bit from here, vacancies will go up a bit, but you won’t see any dramatic movements on either of those fronts in the next nine months.”

New York has lost about 40,000 financial services jobs in the past two years, according to the city’s Independent Budget Office. Earnings for the top 10 largest U.S. banks recovered in 2009 after the companies lost a total of $27 billion in the fourth quarter of 2008. Analysts estimate they will report a combined $3.84 billion profit for the fourth quarter of 2009.

In the second half of 2009, new leases were signed on 9.9 million square feet of space, compared with 6.4 million in the first half, according to Cushman. There were 10 leases for more than 100,000 square feet in the fourth quarter, twice the number from the same period of 2008.

Vacancy Rate

The office vacancy rate declined for two straight months after rising to 11.4 percent at the end of October, Cushman said. The rate was 8 percent at the end of 2008.

Asking rents in Manhattan averaged $55.52 a square foot at yearend, down 20 percent from December 2008.

Sublease space, or surplus offices marketed by tenants rather than landlords, rose to 10.6 million square feet from 8.2 million square feet at the end of 2008. It was down from a peak of 11.4 million at midyear. High sublease availability tends to depress rents because tenants have less incentive to seek top dollar for the space.

“The wholesale dumping of space is over, and has been over for some period of time,” Harbert said. “At some point we’re going to go back to recognizing we live in a space-constrained city.”

Midtown Rents

Asking rents in Midtown Manhattan fell 22.5 percent to an average of $61.82 a square foot, Cushman said. The vacancy rate was 12 percent, up from 8.5 percent a year ago and little changed from the third quarter.

So-called taking rents among Midtown Manhattan’s Class A buildings, the top-quality space, have fallen 42 percent to $52 a square foot since the first quarter of last year. They climbed from $50 a foot in the third quarter, the first sequential rise in at least two years. The increase may be another sign of the market bottoming, Harbert said.

Asking rents are the rents landlords advertise; taking rents are based on the terms of signed leases. They tend to be lower because they include concessions including contributions to interior construction costs and periods of free rent.

Lower Manhattan rents averaged $40.36 a foot, down 15.7 percent from a year earlier. Vacancy was 9.6 percent, down from 9.9 percent in the third quarter.

The area’s vacancy rate may rise to as high as 14 percent in the next 15 months, in part because of Goldman Sachs Group Inc.’s plan to move its headquarters to a new skyscraper in Battery Park City from 85 Broad St. and other downtown buildings, Harbert said.

In Midtown South, roughly the area between 34th and Canal streets, rents dropped 12.8 percent from a year earlier to $47.17 a foot. Vacancy was 10 percent, up from 7.1 percent a year earlier and 9.4 percent in the third quarter.

To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net

Manhattan Office Space , New York Office Space , Office Rental , Office Space , Office Vacancy Rate

Investment Sales Expected to Double in 2010

No Comments »

Sales of office, retail, multifamily and industrial properties asre expected exceed $100 billion in 2010; more than double the $45 billion projected for all of 2009, according to Real Capital Analytics. "We have hit bottom and are starting the new decade on the upswing," the New York research firm said. The projected increase would be the first year-over-year gain since 2007.

Real Capital noted that credit markets have shown signs of thawing, which could help facilitate sales in 2010. It added that capital raising by investors has been stron in 2009, led by REITs, which raised $28.3 billion this year, including $17.2 billion of equity from 59 stock offerings.

Source: Loopnet

 

Commercial Real Estate , Office Building Sales , Office Space