By Ken Ashley
ATLANTA (May 24, 2010)
Cushman & Wakefield recently released the US Office Overview from Q1 of 2010 and like many similar reports over the past 30 days it suggest “steadily improving economic conditions.” The report forecasts that leasing activity will build this year but that construction activity will fall due to the lack of speculative projects and the restrained financing environment. It also suggests that rental rates will continue their downward trend and reach a bottom in some market sometime in late 2010.
As we have suggested in this blog since March, things are on the up and up. So what’s to worry about? Well, jobs of course.
Real estate activity is up precipitously by the tenant community but many of the deals are “blend and extends” that have tenants renewing at the same square footage. More likely, tenant’s are renewing or moving and giving back space. For example, Marsh has a large Atlanta lease that moved to a new location going from approximately 200,000 s.f. to 125,000 s.f. which is a nearly 40% reduction in size.
So, we believe in the recovery, and we can feel it coming like a train down the tracks. However, until we have true job growth and a preponderance of growing and expanding tenants, then we are effectively eating a high carb diet. And as any good doctor will tell you, that is not sustainable if you want a healthy life – or a health economic recovery.
Here’s to a protein rich diet – and a job rich economy!