Smaller Government Pressures Office Vacancies

Posted by Daniel Jones on Mar 29, 2011 5:24:00 PM
Government Cuts Clip Office Market

By Anton Troianovski

Smaller government means less demand for office space, and that is acting as a drag on the recovery of the commercial-real-estate market.

In Washington and elsewhere, government leasing has helped prop up demand in tough times. But now cash-strapped governments are moving to cut back on office space, even as commercial real estate struggles to recover.

In Washington, which has benefited from a surge in space rented by government agencies, the Securities and Exchange Commission renegotiated a 900,000-square-foot lease for new office space down to about 300,000 square feet because the agency didn't get the congressional funding it had counted on to hire new employees.

"We're starting to see the impact of a very, very difficult fiscal situation in the government trickling down to decisions being made for leasing," said Don Miller, chief executive of national landlord Piedmont Office Realty Trust, which will lose the Office of the Comptroller of the Currency as a tenant in at least one building in the wake of the agency's decision to move into some of the space no longer being leased by the SEC.

The biggest impact is likely to come on state and local levels. The states of Illinois, Missouri and Kansas recently hired brokerage firm Jones Lang LaSalle Inc. to reduce real-estate costs, and other states, from California to Florida to South Carolina, are examining ways to pare back their use of space, brokers said…

http://online.wsj.com/article/SB10001424052748703410604576217010392508874.html

property tax appeals

Subscribe to our A Fair Shake Blog:

How Tax Assessors Use Sales to Value Property
HOW TAX ASSESSORS USE THE COST APPROACH TO VALUE PROPERTY
New call-to-action