Construction World SA’s Post

Our latest report reveals an uptick in Toronto office rental rates, driven by demand for premium spaces. Downtown and midtown are shining with trophy buildings leading the charge. Curious about the details? Read the National Post, Inc., and then let’s chat about how this impacts your business space needs: https://lnkd.in/dSpBHcnQ #Toronto #Office #AYdifference

Only 8% of office buildings are thriving, while most of the market has been struggling since the onset of the pandemic. An analysis of 57 U.S. office markets found that only a sliver of office properties are successful in attracting tenants today, a sharp acceleration of the flight-to-quality trend. This upper echelon is designated as prime office buildings, a more exclusive category than Class-A buildings, which account for 61% of the market. Of 830 buildings, 8% by square feet and 2% by building count fit into the prime category. Prime buildings are determined by a multitude of criteria and are the best of the best in their area, rather than nationally. They are the top 2% to 5% of a market's offices when factoring in age, location, design quality, ceiling heights, green certifications, views, amenities and differentiation from other buildings. Prime offices went for an average rent premium of 84% more than their competition in the first quarter. That premium was 60% in 2018. These properties also clocked in a positive net absorption of 48M SF from 2020 until now, while the remaining 92% of office buildings are reporting negative net absorption of 170M SF.Average vacancy in prime buildings was 4.5% lower than the rest of the market, at 14.8%. This gap has widened since 2018, when it was 1.9%. Flight to quality has been a buzzword for years, but the data shows it has taken a firmer hold and that “quality” means something very, very new these days. Office buildings less than 10 years old are posting positive net absorption, while the older properties are rapidly losing tenants. Prime office space will continue to fly off the shelf and Buildings built before 2014 have collectively lost 420M SF of occupancy. In the last real estate cycle, the difference was not so stark, and buildings of almost any age continued to see demand. Prime office space will continue to fly off the shelf and will bring availability down in that trophy category, especially as developers halt office construction due to high vacancy rates and a tough lending market. #CRE #commercialrealestate #Commercialrealestateadviser #commercialproperty #creinvesting #crelending #creoffice

Prime Office Buildings Benefit from New Working Patterns and Tenant Preferences CBRE's recent report highlights how prime office buildings are thriving amid changing work patterns and tenant preferences. Despite a general decline in office space demand, high-end buildings are experiencing increased interest. These premium properties offer superior amenities, cutting-edge technology, and prime locations, which align with the needs of modern tenants seeking flexible and collaborative work environments. Tenants are now prioritizing quality over quantity, leading to higher occupancy rates and rental premiums for top-tier buildings. Sustainability features in these buildings are also attracting environmentally conscious companies. Additionally, the demand for prime office space is driven by companies looking to attract and retain top talent. As noted in Trepp's The Big Picture, the office sector may be accurately described as a tale of two markets. There is a significant variance between the performance of newer, amenity-rich office properties and older alternatives. Per TreppCRE's advanced search, data shows that the largest cohort of office properties are those built in 2006 or later with 95% occupancy, representing 16.81% of the total balance. This underscores the trend that newer, nearly fully occupied properties dominate the office market. For a detailed analysis, read the full CBRE report below. https://lnkd.in/gkqh7zyN #CRE #Office #Trepp #CBRE #CREF #Economy

"CBRE sees prime office space – meaning each market’s best buildings – in shorter supply, leading to prime-office vacancy reaching pre-Covid thresholds of 8.2% by 2027."

Introducing the Latest Office Trends for the Columbus Market! As we navigate the evolving landscape of commercial real estate, staying informed about market trends is crucial for making strategic decisions. Our latest report on Office Trends for Q2 2024 in Columbus is here to provide you with the insights you need. Key Highlights: Vacancy Rates: The Columbus office market experienced a rise in overall vacancy to 18.84%. The urban submarkets, particularly the CBD and Arlington/Grandview, were major contributors to this increase. Absorption: Negative absorption continued for the second consecutive quarter, with a total of 67,000 square feet negatively absorbed. Rental Rates: Average asking rates decreased to $20.81 PSF. Despite this, we expect a moderate rise by year's end as more speculative office spaces are delivered. Sublease Spaces: The desirability of sublease spaces is on the rise, offering tenants shorter-term leases with greater flexibility and lower rents. Over the past three quarters, more than 100,000 square feet of sublease space was leased. Construction & Deliveries: The construction pipeline is at its lowest level in over a decade, but over 30% of anticipated deliveries in 2024 are already preleased. Market Dynamics: The largest lease signed this quarter was by Bostik for 68,981 square feet in the Dublin submarket. Sales volume totaled $68 million, with the largest property sale being 8050 E Main St, which traded at $22.75 million. As we move forward, economic uncertainties and shifting office space needs continue to shape our market. Whether you're a tenant, landlord, or investor, understanding these trends is essential. Download the full report to dive deeper into these insights and more. Stay ahead of the curve and make informed decisions with our comprehensive analysis of the Columbus office market. https://lnkd.in/gdPvh7ac #ColumbusRealEstate #OfficeTrends #CommercialRealEstate #MarketAnalysis ##colliersresearch #colliers #columbusoffice

We're excited to see Calgary thriving as we move further into the year and look forward to the upcoming warmer days! Our Colliers’ Q1 2024 Downtown Office Market Report is now available, and we're excited to share some highlights from this quarter: ⭐Q1 2024 marked another step forward in the downtown office market's recovery journey, with overall vacancy dropping to 27.80% from 29.53% in Q4 2023. This positive trend is largely thanks to robust leasing activity in the AA class market, witnessing approximately 312,000 square feet of positive absorption. Additionally, the City of Calgary’s office-to-residential conversion program contributed to the removal of 8 buildings totaling 1.1M square feet from the B and C class markets, further enhancing the downtown office space landscape. ⭐While about 50% of downtown Calgary’s office vacancy is concentrated in just 10% (or 15 buildings), we see this as an opportunity for transformation and revitalization. It's primarily due to large tenants relocating, resulting in substantial vacant spaces across various buildings that await new leases. Despite rising construction costs, there's a growing demand for ready-to-move-in spaces. 🚧Construction expenses for office space have increased by approximately 30-40% since 2019, leading to a tighter sublease market, which saw about 2.0M square feet of availability in Q1 2024 compared to around 3.5M square feet in Q1 2021. 💲Operating costs have been on a steady rise since 2020, attributed to factors like inflation, increased utility expenses, higher interest rates, and the pass-through costs of building upgrades and amenities such as fitness facilities, conference facilities, and tenant lounges. However, this investment in enhancing tenant experiences has led to increased satisfaction and interest. On average, operating costs for 2024 have risen by 5% compared to 2023 estimates, reflecting ongoing efforts to provide top-notch facilities and services. Colliers' Calgary Downtown Office Market Report Q1 2024: ow.ly/IilX30sBScW #ColliersCanada #ColliersResearch #Calgary

Office Market Review 2024: Insights into Surrey and North Hampshire The 2024 Curchod & Co Office Market Review is here, and it paints a fascinating picture of challenges and opportunities across the office property market in Surrey and North Hampshire. Key findings include: ➡️ 13% decline in office space take-up compared to 2023, with key towns like Guildford, Woking, and Weybridge facing the greatest challenges. ➡️ Grade A office scarcity: Vacancy rates are now below 5%, but new developments and refurbishments are failing to meet growing demand. ➡️ Evolving property use: Town centre offices are being converted into residential spaces, while out-of-town offices are repurposed for industrial use. As Piers Leigh, partner at Curchod & Co, observes: "The 2024 market was a year of two halves. While demand for quality office space remains strong, the lack of new developments and ongoing stock erosion have created a highly constrained market, putting significant pressure on occupiers." What does this mean for occupiers and investors? Explore the full report for expert insights and town-specific analysis that will help you navigate this evolving landscape. Read the full report and download the document here: https://bit.ly/3Psbco7 #CommercialProperty #OfficeMarket #Surrey #NorthHampshire #CurchodAndCo #RealEstateInsights #MarketTrends #BootsOnTheGround

The rise in office conversions is not only reshaping downtown landscapes but also reducing overall office supply at a time when new deliveries are scarce. This trend increases the relative scarcity of high-quality office assets, driving demand for well-located, premium spaces as tenants prioritize best-in-class properties. https://lnkd.in/gPjZ78dT

Office Complex Sells for $77M REAL ESTATE: Attractive Location Spurs Sale in Down Office Space Market By Ray Huard DEL MAR – A Del Mar Heights office campus with five buildings – Highlands Corporate Center – was acquired by Harbor Associates in a joint venture with F&F Capital Group from Blackstone and EQ Office for $77 million. The sale of the 211,000-square-foot campus is indicative of the mixed nature of San Diego’s market for office space with overall demand for office space near all-time lows and vacancy rates far higher than they were pre-COVID while premium properties like Highlands Corporate Center have little trouble attracting buyers. Harbor Associates “What we’re seeing in San Diego is similar to what we’re seeing nationwide, which is a bifurcated recovery,” said Justin Loiacono, a principal of Harbor Associates, adding that buildings in stronger submarkets like Del Mar Heights are outperforming the overall market for office property. Highlands Corporate Center was particularly attractive because it is near the One Paseo shopping center in Carmel Valley. “The asset’s location on High Bluff Drive is one of the most prominent addresses in all of San Diego. That, coupled with the walkability to One Paseo and low-rise, renovated nature of the asset checks all the boxes for office users today,” Loiacono said. “The strong tenant demand has been reflected in the property signing over 150,000 square feet of leases over the past three years.” https://lnkd.in/gC3P4K_S #commercialrealestate #office #office sale

🌟The Three Markets of Office Real Estate according to Cushman & Wakefield The U.S. office real estate sector now comprises three distinct markets, with overall office vacancy rates predicted to peak at 21.6% by late 2025, according to Cushman & Wakefield's midyear macro outlook. Key Insights for CRE Brokers: 🔹 Three-Tiered Office Market:   • Top Tier: 30% of Class A buildings are fully occupied; another 20% have vacancy rates below 15%.   • Middle Tier: Moderate occupancy rates, adjusting to hybrid work trends.   • Bottom Tier: The bottom 10% are highly challenged and potentially obsolete, contributing significantly to vacancy rates. 🔹 Vacancy and Demand Projections:   • Vacancy rates will peak at 21.6% in late 2025.   • A decrease of 63 million square feet in office space this year, and 7 million square feet in 2025.   • Post-2025, demand for office space is expected to stabilize at 20-25 million square feet per year. 🔹 Industrial Sector Trends:   • Vacancy Rates: A projected peak of 6.7% in early 2025, dropping to 5% by the end of the forecast period.   • Rent Growth: Rents have risen by 54% since Q4 2019; expected increases of 3% in 2024 and 2% in 2025.   • Lease Finalization: Tenants are taking longer to finalize leases; space absorption will hit a low of 100 million square feet in 2024 before doubling in 2025. 🔹 Retail Sector Outlook:   • Vacancy Rates: Currently at an all-time low of 5.4% for open-air shopping centers, with a slight increase expected.   • Tenant Mix and Demand: Strong demand and a diversified tenant mix, with approximately 850 more store openings than closures planned this year.   • Supply and Rents: Limited new construction and a large inventory give owners leverage to increase rents. 🔹 Strategic Takeaways for CRE Brokers:   • Focus on High-Quality Office Spaces: Emphasize the demand for top-tier Class A buildings.   • Monitor Industrial Market Adjustments: Advise clients on vacancy rates and rent trends.   • Leverage Retail Space Demand: Capitalize on the scarcity of high-quality retail locations.   • Stay Informed on Market Dynamics: Use insights to guide clients through the evolving CRE landscape, focusing on stability and growth sectors. For the full article visit: https://lnkd.in/gFwh8H_H #CommercialRealEstate #OfficeMarket #IndustrialSector #RetailTrends #CREInvestment #MarketOutlook #StrategicBrokering