High Carb – Low Protein

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!

One response to “High Carb – Low Protein

  1. We are also concerned about the interest rates rising in the next couple years. We feel things are picking up in the Bay Area and elsewhere, but we are weary of what the future brings. The fact that interest rates are artificially low and the Euro continues to downgrade relative to the dollar both have positive affects on the US commercial real estate industry, notably the capital markets. This encourages foreign investment, but also allows owners to hold assets that are underwater or delinquent. In our market, start-ups, tech companies, low new construction and a flight to quality have all had positive affects on the leasing market, which is our bread-and-butter. So we have seen green shoots that lead us to be positive, but still reserved. Thanks for the post!

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