The office space market in Manhattan could be on the road to recovery very soon as job losses slow and company bosses become more confident. Experts say that a lot of “correction” has already taken place and that in the next 6 to 12 months could be the start of the recovery. On 12 months ago prices have fallen 12% and rents have fallen 28%, demonstrating just how difficult a period this has been for real estate companies. Rents could even fall another 10 – 15 % this year, but will bottom out by the start of 2010.
The non proft making Alchemical Nursery is to offer free workspace to local social entrepreneurs. In association with the Gifford Foundation in Syracuse, the nursery is offering office space from July 1 2009 for up to 10 months. To qualify for office space, you must be a social entrepreneur and be willing to operate in a shared office.
Office Depot have been given $350 million from a private equity fund to help ease it through the current economic downturn. In March the shares hit a very low 59 cents, however they have now recovered to $3.89. This is still well below the $30 per share it is estimated the company paid when it bought $2 billion worth of it’s own shares.
The company has been effected during the recession by long leases on stores it no longer uses. It has been reducing overheads by selling property and cutting costs. BC Partners, the London based private equity company will give Office Depot some much needed financial flexibility. It will make relationships with suppliers easier to manage as well as cutting it’s dept to $200 million.
Pierce Countys office vacancy rate has gone up to 11.9 percent in Q2 of this year. In quarter one it was 10.62 percent. The news was revealed buy international commercial property company Colliers. The report blames the increase in the vacancy rate on a sluggish economy. Many companies have either left the area of have been contracting. The rise was compounded by the empty space at Tacomas Old City Hall which is now back on the market. The rate was around 11 percent this time last year.
The vacancy rate for industrial space in the area is slightly lower at 9.14 percent. The reason why the rate was lower was down to some recent deals such as OReilly Automotive and plastics company Saint-Gobian in Puyallup, Colliers reports.
Deutsche Bank analysts painted a grim picture of the US office market. They have predicted that urban CBD’s may not recover until at least 2017.
Richard Parkus, the banks head of commercial securities research said that “The froth is still working itself out.” He went on to add that the current downturn was similar to the problems encountered in the early 1990’s. Worryingly he added that the market was currently getting worse rather than better. Falling demand means that rents are falling, and this in turn means that owners cannot meet their mortgage repayments.
Property values could fall a whopping 50% it was argued.
PR firms that are suffering in the current recession may have a glint of light at the end of the tunnel. If you have been shedding staff and now have empty office space. you could use this area to expand your current service offering. Instead of allowing the area to cost you company money in terms of unused office space, why not sublet it out to a like-minded company that will enhance your offering to clients. By allowing other companies to come into your workspace, you open up lots of new business opportunities. For example, you could let space to company’s that have clients themselves but do not offer PR services.
Calgary has in recent years been noted for it’s office low vacancy rates. However, the biting recession has changed all this, and now it has some of the highest rates across Canada. The only factor which might halt the rise in the vacancy rate is a sharp increase in energy prices. In Q4 2006, the vacancy rate was an incredible 0.5%, now it stands at 8.9%. Although not the highest rate across the country, it is still well above what local commericial property experts would expect.
The total stock of office space in Calgary is 33.5 million square feet, but there is also 5 million sq ft in construction. The total amount leased this year has dropped 900,000 sq ft. Demand has been falling rapidly, and those looking for office space are seeking a cheaper sublet.
During the past few months, we have seen a huge increase in the amount of companies in the US opting for sublet office space. Subletting office space is very often seen as an affordable way to find some well located office space at reduced rental prices. But as a subletting tenant, you are at the behest of your over-landlord. They will be paying a higher rent than you, but they must still be able to meet this rent otherwise you will face default and then possible eviction. Therefore your office can be placed at risk, as your destiny is in the hands of another company’s fortunes.
Another problem with subletting office space is that it is not scalable. How do you know what size your business will be in 1 or 5 years time, especially at times of recession. If you take too much space you will be over paying for unused space as well as the associated costs such as cleaning, maintenance and utility costs. If you don’t take enough office space, you will either have to sublet your space to someone else, requiring more time, effort and legal advice.
When looking for your new office, you have the option of find the space yourself or opting to use an office broker. Using a broker will usually save you both time and money, and will also ensure you find the right office space that suits your needs. This is because a broker can act as an independent guide to the available real estate in your area, as they do not have any allegiance to one particular building. Many real estate companies have tie ins with particular buildings and may act in their interests rather than yours.
Of course you could avoid both real estate companies and brokers and search yourself. However, unless you are an expert in this field then it is probably not the best option. You wouldn’t attempt other profession, such as open heart surgery, without formal training would you? Using a broker means that you will have someone trying to secure you the best deal possible in the most suitable office. Although they get commission from the owners for placements, they need to build a reputation for acting in the interests of the tenant, and that is what the vast majority do.
Here is a video about what a Virtual Office actually is. This is quite a useful explanation, as not everyone is aware of what a Virtual Office is. Virtual Offices are essential for start up companies as well as letting larger companies open in new markets.
