Franklin Wallach’s Post

Limited deal activity and low new supply amid a sluggish economy resulted in only marginal change in the Greater Vancouver Area office market in Q3 2024. The key takeaways are: - The vacancy rate rose for a third consecutive quarter to 9.4%, it’s highest level in over eight years, up from 8.9% last quarter and from 8.6% one year ago. - Q3 2024 saw the first quarter of negative absorption this year driven by a 414,000-sf increase in headlease space, it’s fastest pace of growth this year, but well behind the rate of increase seen in late 2023. Sublease space remains popular with tenants thanks to their typically lower costs and shorter lease terms and saw a 25,000-sf decrease in vacant space this quarter. - Office development is limited to smaller suburban projects and podium space in residential developments and much of the new space delivering this year is coming online without pre-leasing in place. A notable exception this quarter was the Main Alley campus in Mount Pleasant (M4) which had 84% pre-leasing already lined up at time of completion. - The average asking net rental rate is down 1.2% year-over-year to $34.06 psf and faces further downward pressure in a continuing tenant’s market. Options to negotiate on rates, deal term, free rent periods, and improvement allowances abound. - Market fundamentals have shown improvement over the last year with the rate of increase slowing for vacancy, absorption showing some positivity and the construction cycle coming to an end, lining the market up for recovery once demand from tenants returns. You can find more details and the breakdown of the various submarkets in the latest Colliers report here: https://lnkd.in/gxCGySvU

Manhattan landlord SL Green has been one of the top-performing property stocks this year despite stiff competition for tenants. This performance suggests that the worst may be over for New York's office market, but challenges remain. SL Green Realty Corp, Manhattan’s largest office landlord, reported impressive second-quarter results, exceeding analysts' expectations with funds from operations reaching $2.05 per share. The company’s portfolio is performing well, with notable success at its Summit observation deck at One Vanderbilt. SL Green aims to lease 2 million square feet of space in 2024, having already secured tenants for 1.4 million square feet. They also anticipate an occupancy rate of approximately 91.5% this year, signaling a recovery trend. Shareholders are optimistic, as SL Green’s stock has outperformed in the property sector and trades at a premium to its asset value. However, the broader Manhattan office market still faces significant hurdles. Since March 2020, an additional 42.8 million square feet of office space has flooded the market, pushing the office availability rate to 17.9% by the end of June, a slight decrease from the all-time high of 18.1% recorded in the first quarter. Tenants prefer high-quality, Class A buildings to encourage workers back to the office, resulting in these buildings capturing the majority of leasing activity. However, with almost two-thirds of Manhattan’s office stock being Class A, the market remains oversupplied, necessitating landlords to offer incentives such as free rent and generous tenant improvement allowances. Certain areas are showing resilience, such as Class A buildings built since 2000 with a lower-than-average 13% availability rate. Midtown, particularly the Plaza District, is seeing a decrease in empty spaces, and rents in Hudson Yards, Greenwich Village, and Chelsea are surpassing their prepandemic averages. In contrast, Downtown is struggling with higher vacancy rates and declining rents. Conversion of older office buildings to residential properties, like the Flatiron Building, is a strategy to reduce excess office space. However, significant demand growth is needed to substantially lower the overall availability rate. Despite recent gains, SL Green’s share price is still about 30% below its prepandemic levels. While there are positive signs, Manhattan’s office market remains a challenging environment. #NewYorkRealEstate #ManhattanOffices #SLGreen #OfficeMarketRecovery #RealEstateTrends #CommercialRealEstate #NYCRealEstate #OfficeSpace #PropertyInvestment #ClassABuildings #RealEstateNews https://lnkd.in/eSPncB9x

Dallas' office market is showing promising signs! According to recent data, investment sales transaction volume is on the rise and new developments are meeting the corporate demand for "experiential real estate" to bring employees back. However, our vacancy rate is still feeling the impact of the 1980s, which was the greatest decade for development in our city's history. Let's keep an eye on these trends and see how they develop throughout the year. #DallasOfficeMarket #CommercialRealEstate #InvestmentTrendsGranite PropertiesHighwoods PropertiesKDC Real Estate Development & InvestmentsPacific Elm Properties

The NYC office market is finally showing real signs of recovery. According to Savills, Q3 2023 saw the most active quarter since 2021, recording 9.3M SF of signed leases, representing nearly a 50% year-over-year increase. The financial services sector took center stage, accounting for 40% of total leasing activity.   Large-block transactions are leading the resurgence charge. Already this year, according to Avison Young's Danny Mangru, 25 leases over 100K SF have been signed, compared with 18 at this time last year. The momentum is ongoing: In the first two days of Q4, two large leases were completed, signaling strong demand as we head into the final months of 2024.   It is clear that trophy and Class-A properties are in demand; although they make up only 25% of the inventory, more than 75% of the leasing activity was this year. As competition for top-tier space heats up, the market adjusts.   However, with average asking rents down 0.3% for the quarter and 1.6% year-over-year, this appears to be primarily driven by a lack of options in premier buildings and rising vacancies in older Class-B and C assets. The bottom line is that while pricing has softened in certain segments, premium properties are getting more competitive, and there are still opportunities for strategic moves.   Putting it bluntly, as Rory Murphy with Avison Young puts it, there is reason for optimism going into 2025. Though the time to close a transaction has lengthened from what was considered typical pre-pandemic, there is a sense that as we move onward, timelines are beginning to compress.   What type of trends are you seeing in your own office letting activity? Let's connect and discuss.

Our latest insight has found that appetite for prime space has driven Central #London office demand to a record high of 13 million sq ft for the 3rd consecutive quarter. Grade A offices registered their highest-ever proportion of overall take-up, reflecting many occupiers prioritising quality and commencing searches earlier than they previously would have, in light of a constrained development pipeline beyond 2025. Find out more and read the full article here > https://cushwk.co/3X8X87L For more information please get in touch with Andy Tyler, Ben Cullen, or Heena Gadhavi. #cwoffices #centrallondonoffice #cwmarketbeat