Buffalo Business First’s Post

Pretty devastating data about the diminished attractions of former financial services powerhouse, Canary Wharf - largely but not totally to do with declining demand after Covid. It was always a soul-less location and not the kind of mixed use location in which those employees with choice would wish to work so now the financial district of the City of London (the small bit known as the 'Square Mile'), with its great ambience , mix of uses and walkability/connectivity is reasserting its appeal. I do actually think the post Covid damage to office districts at its most radical will make some of them seem like abandoned mining villages in the north-east of England. Clearly some of them will be amenable to adaptive re-use but not all. And yes I know that Canary Wharf was a symbol of Thatcherism and the phoney financial services economy of the 90s and noughties but at its peak it did actually generate, in a docklands area which had collapsed economically, 100,000 jobs at an average salary of just under $200k(Aus) with 7,000 jobs minimum servicing the estate, most drawn form East London. Symbolically, one of the buildings now trading at a serious discount in Canary Wharf once houses the Olympic Delivery Authority for the London Games 2012. #economics

Heard on the Street.... "For the first time since at least the late 1990s, city-center offices have been emptier than suburban locations for eight consecutive quarters, based on data from real-estate consulting firm Colliers. Big-city tenants still want to be downtown, close to a large pool of workers, but they are shrinking their real-estate footprints more aggressively once their leases come up for renewal. The Covid-19 pandemic had a more dramatic impact on working patterns downtown than in the suburbs. City centers hollowed out for longer as workers didn’t want to travel on mass public transport. They also liked not having a long commute five days a week and have held on to this flexibility thanks to a strong labor market. Workers in suburban office markets, who tend to drive to work, returned to the office earlier. Downtown-office valuations were more vulnerable to a crash because they were previously considered such a safe bet. As e-commerce made it toxic to own stores, everyone from pension companies to sovereign-wealth funds doubled down on offices in central business districts. This pumped up prices in a way that didn’t happen in the suburbs." (h/t Giovanni Palavicini) By Carol Ryan via The Wall Street Journal

Interesting read with your morning coffee ☕ Hybrid schedules and fewer office workers are causing buildings in Boston and many other cities including Denver to sit empty and property values to plummet, which could mean less tax revenue, fewer city services, and ultimately fewer residents. Welcome to the "Doom Loop." The commercial real estate collapse of the 2020s has the potential to cause catastrophic collateral damage to the cities which some reap more than 30 percent of its tax revenue from commercial property. The reduction of value of commercial real estate has property owners seeking tax reductions on their devalued holdings. This, in turn, forces drastic cuts in the basic services—cops, schools, sanitation, and transportation—that make cities livable, which in turn leaves the place even less attractive to investors and encourages residents to flee. In Denver, the downtown area commercial tenants are fleeing. Stores and restaurants are closing. Solution..., a proposed 10 year $500 million transformative investment to restore vibrancy, expand economic opportunities, and enhance the overall appeal of the Denver... Where is the money coming from? Where are the entrepreneurial opportunities in Boston, Denver and other cities experiencing the same... Thoughts? Source: https://lnkd.in/g3kEicDf #officebuilding #commercialrealestate #RealEstate

Allied Properties REIT stock performance says a lot about offices: Stock Price March 2020: $42.50 Stock Price April 2024: $12.50 Price over last 5 years: down 64.7% Vacancy Rate of the Entertainment District in Toronto in March 2020: 3.4% Vacancy Rate of the Entertainment District in Toronto in April 2024: 28.4% (Allied is the predominant landlord in this submarket.) What does this mean? If you talk to most landlords or brokers, they will tell you that these dynamics are merely an acceleration of a “flight to quality.” That feels rather convenient—there is definitely more to this story. We can use Toronto and the Tech Sector as a proxy for many major markets in the US. And when you peel back the layers, some factors are hard to ignore: 1) SMB tech companies in downtown Toronto represented the majority of demand for space pre-pandemic—now it’s crickets 2) The average lifespan of a public company has shrunk from 60 years in the 1950s to less than 20 years today—meaning the “traditional” employers cited to be keeping the AAA class office market strong have fewer and fewer years in front of them 3) Office utilization is half of what it was pre-pandemic (25% overall) in the US, with many leases yet to expire Main takeaways: 1) The SMB Tech Sector has done a 180 away from the office 2) The “flight to quality” narrative is, at a minimum, overstated, as much of the leasing activity cited occurred before the pandemic 3) Top-down mandates have been proven ineffective, but this doesn’t mean mandates aren’t also artificially propping up the market None of this is to say offices aren’t needed in the future—they are. But what is clear is that the companies of tomorrow have adjusted to distributed workforces VERY quickly, and large companies are still holding onto gobs and gobs of space (including in AAA-class buildings). All of this has downstream implications that aren’t “priced” into any reporting from the CRE sector due to obvious conflicts of interest. Agree?

As we enter Q3 2024, let's review the previous quarter's office and industrial market conditions in Tampa, Florida. ⚡ Tampa's industrial market is cooling after years of strong performance. The vacancy rate is above the 10-year average of 4.9%, and rent increases are returning to pre-pandemic levels. Although supply has recently exceeded demand, the focus on build-to-suit developments should stabilize the vacancy rate. While the office market today largely contrasts what it was pre-COVID, tenants are returning to in-person work, mainly in Class A spaces. Demand is stronger in Westshore and Downtown, where high-quality buildings attract new tenants and relocations. Westshore saw significant activity with CAE USA's new 290,000-square-foot headquarters. Over the past year, Tampa recorded 340,000 square feet of absorption, largely driven by these areas. #IndustrialRealEstate #OfficeRealEstate #Leasing #Sales #MarketTrends #TenantRep

Contrary to Train's song "Save Me, San Francisco", it looks the return of office culture could be doing the saving. The City by the Bay may be experiencing a commercial real estate comeback of sorts come the new year. Call it the real estate reality check, but between the increase in office building sales at a discount, and gradual demand for office leases, San Francisco's office market may have hit bottom and is now poised to bounce back. Since the end of the pandemic, the downtown and financial district areas have been a shadow of their hustling themselves. Empty streets, record-high vacancy rates, and high numbers of remote workers tell the tale of a city in transition. Times seem to be changing, however, as office sales and transactions seem to be coming out of dark period. Investors are buying buildings at discounted prices (some at unheard prices) that no one would've ever imagined in San Francisco's hey days. Companies, namely AI startups some flush with funding are once again signing leases or at least subleasing at you guessed it, discounted prices. Most notably, tenants signed more than 7.6 million square feet of new office leases in 2024 with the tech industry accounting for 47 percent of that activity. Of underlying significance is the return of office workers. Of all the changes, workers are arguably the most important because they also drive the local economy. From coffee shops and restaurants to delivery services and specialty shops, workers are the lifeblood that fuel those businesses. Is the San Francisco comeback we've been waiting for? Looking charts and graphs, the uptick may not look like much, but it's a sign of life. I call that the beginning of something bigger https://lnkd.in/gTGnr6ht #sanfrancisco #realestate #officespace #startup #workforce #workers #economy

Office’s Vacancy Rate Broke Another Record. The office sector’s vacancy rate continued its steady climb and finished the year at another record high of 20.4%.  Year over year, four of the top five metros with the largest positive net absorption were found in the Sun Belt, as Atlanta (1.4 million sqft), Tampa-St. Petersburg (1.0 million sqft), Northern New Jersey (825,000 sqft), Miami (773,000 sqft), and Houston (744,000 sqft) leading the pack. On the opposite end, five of the top six metro’s which have experienced the largest vacancy rises in 2024 were found in the Western region, with San Jose (+3.8%), San Francisco (+3.4%), Portland (+2.9%), Phoenix (+2.8%), Louisville (+2.7%), and Denver (+2.7%) lagging the most. https://lnkd.in/gh-ewK6P #Leasing #Office #CRE

The Palm Beach County office sector is in a transformative phase, with shifts in vacancy, absorption, and rental pricing. Here are some insights that paint a picture of what we are observing: 💰 Bid as spreads: Remain as wide as 20%+ for non A located class B general office product. 📈 Slight Rise in Vacancy Rates: Overall vacancy ticked up to 9.0% this quarter, with a net absorption loss of (174,500) square feet out of 53MM SF of inventory. It’s a reminder that landlords may need to get creative to keep occupancy rates steady when applying upward pressure on renewals. Each submarket varies... 💸 West Palm Beach CBD Office Highlights: There is 3.3MM SF of total class A inventory (9.9% vacant/$86 FS) vs 2.2MM SF class B (11.0% vacant/$35FS). With 604,000 SF under construction it will be interesting to see what class B absorption levels look like after these projects deliver. 🚀 Big Bets on WPB’s Future: West Palm Beach’s profile is on the rise. Vanderbilt recently was approved to expand its campus in downtown WPB, and Related Companies' Steven Ross is fully backing WPB as the next big business hub. High profile investments like these underscore the region’s potential as a future center for tech and innovation. Into 2025, we are expecting capital allocations to shift, and dry powder to start moving off the sidelines as office values begin to (hopefully) stabilize! #PalmBeachRealEstate #OfficeMarket #Investmentsales #WestPalmBeach #CommercialRealEstate

Reflecting back on the first half of 2024, there have been lots of positives to take from how the Newcastle City Centre office market has performed.   Prime office rents have held firm at £32.00 per sq ft. and are 31% above the level recorded at the onset of the pandemic, the largest growth seen across all of the UK regional cities tracked.   Demand remains strong, but is very much focused on the prime Grade A stock. There is now very little occupier appetite for lower grade office space that lacks ESG credentials and building amenity.   With recent political and economic developments brightening the outlook for commercial property, I wonder what the next 6 months will bring? One thing which is clear is supply is running out in the new build office schemes, and with no new development due to complete in 2024 or 2025, in the medium term at least occupier activity is likely to swing towards the very best refurbishments across the city.   Read the full report here for the latest insights 👉  https://lnkd.in/eC7stgqp #KnightFrank #UKCities #MidYearReview #YourPartnersinProperty Nathan Douglas Ian Tew Dickon Wood Jill Farmer Emily Seager John Edwards Knight Frank

Albuquerque Office Figures Q4 2024 Highlights: • While 2024 absorption remained negative for the second consecutive year, it showed a 45.3% improvement over 2023. Downtown Albuquerque led the market in year-to-date net absorption due to recent move-ins at 500 Marquette Ave NW. • Overall vacancy for the Albuquerque office market inched up to 11.6%, marking a 300-basis-point (bps) increase year-over-year, with the largest vacancy shifts primarily in North I-25 and Rio Rancho, where Hewlett-Packard (HP) downsized their occupancy. • Despite the increase in vacancy, 2024 saw a 14.5% increase in transactional activity, as companies continued the trend of downsizing. • Between 2023 and 2024, the availability rate dropped dramatically from 17.4% to 13.7%. Significant declines in available space were observed in Downtown Albuquerque and Rio Rancho, where over 25,000 sq. ft. were leased to Proud Moments and SW Healthworks at 500 Unser Blvd SE. • There were no construction deliveries in 2024, however, the 30,492-sq.-ft. Portland Building (2100 Louisiana Blvd NE) is expected to finish in early 2025. View the full report here: https://lnkd.in/gEWuxqVx