Some hang on to optimism
These days, you probably know that not only residential units have disappointing statistics, but commercial real estate is also a victim of the global recession. Since the fate of the market is tied to the growth or contraction of their businesses, the huge drop in sales has hit offices and establishments across the board. Some even went bankrupt and abandoned the real estate market altogether, leaving others to grapple with displaced clients in a market loosing its financial vibrancy and commercial appeal.
Real estate services firm Jones Lang LaSalle says, in their 2009 North America Office Report, that the vacancy rates in the country reached a six-year high. It states “… The increased space options on the sublease market, along with some scattered new developments across a handful of markets, have pushed vacancy levels to recent highs. At the end of the second quarter, 14.7 million square feet of occupancy losses lifted vacancy levels from 16.5 percent to 17.0 percent. Eighty-two percent of markets that Jones Lang LaSalle tracks reported occupancy losses during the second quarter… Occupancy losses of 34.0 million square feet over the first six months of 2009, totaling 1.1 percent of the entire office inventory, have pushed vacancy up 180 basis points from the end of 2008. Twenty-five of 28 office markets that Jones Lang LaSalle tracks posted occupancy losses through the first six months of 2009. West Palm Beach, Miami, Jacksonville and New York all demonstrated year-to-date occupancy declines equating to more than 2.0 percent of total inventory.”
But, some people are optimistic and undeterred by the current downturn in the market. Recently, the Commercial Real Estate Women (CREW) in Richmond, Virginia selected 18 college-bound women to try their luck at commercial real estate. Divided into groups, thousands of square feet in a building were allotted to the teens. From this blank space, each group had to create and develop facilities for a potential business. For the final challenge, each group had to find tenants for their venture. The Richmond-Times Dispatch adds “… The teens spent the day at the old Miller & Rhoads, now the Hilton Garden Inn Richmond Downtown and Miller & Rhoads Residences. After a morning panel discussion in which women who work in commercial real estate talked about their areas of expertise and why they chose the career, the students donned hard hats and toured the vacant storefront facing Broad Street. Later, they presented their plans to other students and several experts on hand to mentor them. Monique Johnson, who organized the day’s event and is an underwriter for the Virginia Housing Development Authority, said the exercise was a good way to get the young women interested in a career dominated by men.”
We can just imagine how these teenagers’ parents would react if they told them they’d decided to pursue a career in commercial real estate, especially with the current failing market in mind. How many property professionals have changed careers or taken additional work anyway? But, think about it, the economy could be rebounding within the four years that they’d spend in college. By that time, they could be a part of a booming real estate market.