The office market in Birmingham is performing better than other comparable markets in the region according to local commercial real estate companies. Overall across the US the average vacancy rate in metropolitan areas was 12.9 perent, with suburban areas being close to 17 percent. Cushman and Wakefield compared 75 US office markets and found that Birmingham’s vacancy rate was below the national average and below other local markets.
The rate is currently 8 percent, which is up 1.4% from the end of 2008. This is the highest it has been at the end of Q3 2007. The downtown rate was 9.1% and the suburban rate was 12.1%
Compare this other other major US cities such as…
- Atlanta (21.1 percent downtown and 16.8 percent suburban),
Jacksonville (17.5 percent and 22.9 percent)- Memphis (16 percent and 13.9 percent)
However, local agents are not taking anything for granted as their is still the dangers posed from a great deal of sublease space that has come onto the market of late. There is also a lack of construction for new supply. However the market as a whole is doing much better than other major US cities – in Dallas the vacancy rate in downtown areas is over 27%
There has been pretty much no positive news to report from the US Office Market is the last 6 months. From each state, vacancies are rising, rents are falling and demand is shrinking. How long the slump will last is difficult to tell, it largely depends upon how long the recession lasts for. One thing that has also been constant amongst the office markets across the US is the amount of sublease space that has flooded the market.
This causes a major headache for landlords and agents for a number of reasons. Firstly it disuades occupiers from taking up new space, as they can get a better deal leasing vacanct office space in existing buildings. This is turn brings down the average rental value for landlords, and also means that there is excess supply in the market, most of which has to be soaked up before occupiers consider new builds. And with excess supply AND a lack of liquidity, developers are finding it harder to find the money for new space to be built. With continuing rises in US employment levels, it seems the troubles in the office market are here to stay.
A fall in demand for Office Space in New York has meant that some landlords are having to “think small” when it comes to getting in new tenants. Many are now œprebuilding space for tenants, meaning that new occupiers do not have to spend the money for fit outs. The amount of owners who are practicing this kind of activity has increased significantly in the last twelve months. Brokers refer to this practice as “turnkey” office space, as the tenant is ready to start work as soon as they get through the door. And these ready to use offices are available are some of the prestigious locations across New York such as the Metropolitan Tower, at 142 West 57th Street, and 666 Fifth Avenue.
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The CBD in Chicago has not fallen as low as in previous recessions, however no one is predicting the market will recover in the next 12 months. A major headache for agents is sublease space, of which there is now 3.5 million square feet. This drags down rental values and dissuades businesses looking for office space to move into new builds. The vacancy rate (including sublease space) is around 15.3%, but this is close to reaching 16.5% which was the level in 2001 when the dot com bubble burst and thousands of companies went into liquidation. The rate excluding subleased space is 12.2%, which is above the 11.4% rate in 2001.
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The New York office market and many of the landmark towers are currently awash with sublease office space. In Midtown Manhattan which is populated by some of the world’s biggest and most important financial institutions, there is sublease space available in 75% of the towers themselves. And those landlords who have space available are not always finding it easy to get the space filled, such is the large volume of vacancies. In midtown, the vacancy rate for class A space – that is highly desirable offices in prestigious locations, was 13%. This is up from just over six and a half percent a year ago.
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The district of Ontario in Canada is planning to spend $100 million on new green office space, that will also create 1,000 new jobs. The former head office of Sears has been acquired by Ontario. It will be redeveloped in an attempt to be as environmentally friendly as possible. Here are some of the energy saving features.
- A green roof
- Solar energy panels
- Daylight & occupancy sensors for optimal lighting control
- Modern IT equipment
- Wireless Internet
- Bicycle storage and limited parking
George Smitherman, Deputy Premier and Minister of Energy and Infrastructure said that the new initiatives would help push the green agenda in Ontario and would also help fuel a green economy. With businesses looking to be as green as possible and save money on energy costs, it is admirable that state representatives are taking a lead in this area.
The office space market in Washington has suffered one of the most sluggish periods in recent history, suffering from falling rents, rising vacancies and a lack of new supply. The troublesome period is set to continue with over 11 million square feet of space due to come onto the market in the next few years. Commercial property experts in the vicinity also say that with “lackluster demand” and with unemployment levels continuing to rise, it is unlikely that the situation will improve in the near future.
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The level of empty office space in Alexandria rose steeply compared to this time last year. The city’s vacancy rate went from 7 percent to 14 percent. There is also a high vacancy rate in other area’s of the city with a 15.2 percent rate for Northern Virginia and 13.5 percent for the Washington area.
The rate would be significantly lower but for the Victory Center Building, which was recently added to the vacancy list after renovation. Prominent local officials say that most of the companies in the vicinity employ less than 20 staff and that these kinds of businesses were most at risk from the economic downturn.
Part of PepsiCo Inc. has let over 90,000 sq ft in Plano. The site, 5340 Legacy Drive, is owned by KDC according to local commercial property brokers. It is known as the Campus at Legacy and previously housed EDS offices but was renovated by KDC. The lease on the deal is one of the largest signed this year and there is room for several hundred employees. PepsiCo currently has 1300 staff in Purchase, N.Y., and also owns Plano-based Frito-Lay.
Although the company refused to comment on the deal, they have the option to lease further office space if required.
Hot on the heels of Regus, who have recently announced $45 million investment in telepresence technology, a smaller serviced office company has also added telepresence style technology at three locations. They are Arlington, Texas, Scottsdale, Arizona and Memphis, Tennessee.
With companies having strong concerns about the cost and environmental impact of global travel, telepresence and video conferencing has come to the fore in the current downturn. It must also be pointed out that a telepresence is unlike previous versions of video conferencing. The screen and sound quality is superb, with multiple participants able to interact on huge, high resolution screens making for a lifelike meeting. It is a million miles away from jolty web cam conferencing, that is only suitable for one to one exchanges.
Some may perceive this technology as expensive, with meetings costing over $200 per hour in a telepresence suite, however this is designed as an alternative to air travel and accommodation, not to mention loss of working hours. Each suite is designed using high end communications equipment from leading suppliers such as Cisco or Polycom. In short, it has to be seen to be believed!
