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Studley: opportunity at crossroads.

"The country is currently at a dramatic crossroad, where there are unprecedented economic opportunities available," said Julien J. Studley in his recent state-of-the-market address in Washington, D.C.

The founder and chairman of Julien L Studley, Inc. offered more than a hint of optimism to the 500 real estate professionals in attendance at the "Commercial Brokers Forum '93".

In an almost teasing tone, Studley pronounced the forum to be "the right time, the right place and the right environment" for a discussion of the real estate marketplace. According to Studley, a newfound sense of optimism currently pervades the country, "although there are no definitive statistics to support this shift in mood."

Furthermore, Studley noted that this positive perception has, in turn, created some pressure on tenants to initiate and complete transactions more swiffly than in the past.

Studley urged owners to take advantage of this perception, which is, in fact, ahead of reality and close transactions now. Studley projected an even further upswing in leasing activity in 1993, specifically in those markets that were hit earliest and hardest by the recession such as Houston and New York.

Studley cautioned that despite this increase in demand, there is still a tremendous overhang of space, exacerbated by the continual downsizing of corporate America.

"The significant imbalance between supply and demand has created double digit vacancy rates in most primary markets nationwide, ranging from 10.75 percent in San Francisco to 17.3 percent in New York and 23.1 percent in downtown Chicago," said Studley.

He added: "However, the almost total halt of new construction virtually guarantees future shortages of quality product. Those areas which have consistently had some level of development control in place, such as Washington, D.C. and San Francisco, may be the first to experience significant shortages."

Studley continued by discussing some of the more unique aspects of the marketplace. For example, he noted that in certain markets, such as Chicago and Los Angeles, the suburbs are actually more vibrant than the urban centers, and "in the reverse of a long-standing trend, some companies are looking to relocate from the suburbs to the central business districts where there is an abundant supply of space and more reasonable transaction terms."

Additionally, Studley commented on the proliferation of build-to-suits occurring throughout the United States. He stated, "The lack of new construction has left many sizable tenants unable to locate suitably large blocks of contiguous Class A space in preferred markets. Given the low cost of land and construction, build-to-suits are becoming an increasingly viable alternative."
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Title Annotation:Julien J. Studley Inc. chairman optimistic on future of real estate industry
Publication:Real Estate Weekly
Date:Mar 24, 1993
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