NAI releases 2003 Real Estate Planning Guide.
In the United States, nearly all property types have seen a jump in vacancy rates over the past year. Only retail power centers and regional malls saw tightened vacancy. NAI reports that CBD Class A office space rents were up over 6% even though vacancy increased from 8.81% in 2001 to 11.66% in 2002, and suburban Class A office vacancy rose from 11.83% in 2001 to 16.21% in 2002. New York continues to lead the nation with rental rates above $110 per SF for premium space in trophy locations and exceeding $60 per SF for average office rents.
The mixed signals in office space and rates over the year included huge blocks of space and sublease space coming onto the market as a result of the WorldCom, Enron, Global Crossing and Adelphia bankruptcies, as well as the implosion of Arthur Andersen. Continuing difficulties in the high tech arena led to growing vacancies in such tech centers as San Francisco, where vacancies hit 20%, and Boston.
Chicago was another hard hit office market, especially in the suburbs, where vacancies including sublease space rose to 26%, and some submarkets topped 30%. On the upside, growing demand from professional firms led to a tightening of the market in Los Angeles, where vacancy rates decreased about six percentage points to 17%.
International property markets reacted similarly to the uncertainty in the global economy. While Canada reported another "boringly positive report" as the GDP and employment are growing steadily, yet occupancy levels are decreasing in office and industrial properties as companies more efficiently use space. In Asia Pacific, China is the economic leader, with an impressive 7.5% growth rate in the past year. Hong Kong, however, has seen a 35% decline in office rents, with occupancy dropping from 85% to 70% in 2002.
European markets also felt the aftershocks from the negative factors that affected the U.S. economy, and now are anxiously looking at the possibility of war in the Middle East. The strength of the Euro, however, somewhat buffered what was a turbulent year. Industrial production fell by 0.8% and the volume of growth in retail sales decreased to an annualized rate of 1.5% in the past year.
Weakening demand characterizes much of the office leasing market, as evidenced by climbing vacancy rates in London and Paris. Uncertain global economic conditions have affected the European industrial and retail markets, but key retail markets have seen a slow improvement in occupancy. Finally, NAI reported that in Latin America and the Caribbean, the outlook for investment is strong in Mexico, Brazil, Chile, Andean Pact countries and the Caribbean markets. Argentina and Venezuela, however, are suffering from political uncertainties and severe inflation--at more than. 70% and 30% respectively. There is an optimistic outlook for Latin America, as trade agreements, lower labor costs and natural resources will encourage increasing numbers of companies to turn toward these markets.
NAI's 2003 Real Estate Planning Guide includes information on key global trends, regional overviews, a ranking of top cities for each region, and detailed, individual market reports for 203 markets that combine a narrative overview with statistical charts showing economic profiles, rental rates, vacancy rates and land prices. All information is contributed by the local NAI firm for each market, based on their extensive market knowledge and experience. Please contact Rebecca Zeiders at (609) 448-4700, or email@example.com, for more information or to reserve a copy of the publication.
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|Publication:||Real Estate Weekly|
|Date:||Jan 15, 2003|
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