The U.S. office sector will be the slowest to recover as companies absorb empty space and advances in technology reduce the need for square footage, said Kenneth Rosen, a professor at the University of California, Berkeley.
Unoccupied "shadow inventory" accounts for 3 percent to 5 percent of total business leases, and that space will be filled before firms sign new rental agreements, Rosen, chairman of Berkeley's Fisher Center for Real Estate and Urban Economics, said at a conference in San Francisco. Cloud computing and other tech advances let employees work away from offices, further reducing space needs, he said.
"Every company has shadow space," Rosen, who also runs Berkeley-based hedge fund Rosen Real Estate Securities LLC, said in an interview yesterday. Most U.S. cities face prolonged vacancies because of the surplus, excepting Washington, New York, San Francisco, Boston and parts of the Silicon Valley, where technology and venture capital spur leasing, he said.
"If you're in the knowledge-based industries such as VC, everything 'green' and social media, there is a large, growing demand for space," Rosen said.
The average vacancy rate in U.S. central business districts fell to 14.7 percent in the third quarter from 14.8 percent in the second quarter, Cushman & Wakefield Inc. said last month. The overall rate including suburban areas rose to 17.5 percent, the highest since 1993, from 17.4 percent, according to the New York-based broker.
Prices for U.S. commercial property rose in September after falling to an eight-year low the previous month, Moody's Investors Service said yesterday. Demand for the best office buildings in major markets pushed up the Moody's/REAL Commercial Property Price Index 0.3 percent from a year earlier as investors sought returns higher than fixed income. Prices gained 4.3 percent from August...
In what could be another sign that the housing crisis is far from over, the percent of mortgage holders who are underwater on their homes continued to rise in the third quarter and some say it could be another eight to 10 months before that trend turns around.
In the U.S., 23.2% of U.S. mortgage holders were underwater, owing more money than the house is worth. That's up from 21.7% from a year ago, according to Q03 data out Wednesday from Zillow.com. Roughly 13.9 million homes now have negative equity. Many of these homes could end up in foreclosure should borrowers give up making payments on homes that aren't worth what they owe-let alone building equity. (See "The Great Mortgage Mystery")....
...Some economists expect there's more to come-into 2011. "One-quarter of homes [with mortgages] with negative equity is a huge number, but I don't believe this will hit bottom until June or July," says Cameron Findlay, chief economist at LendingTree.com. He projects that average homes prices could drop another 4% from now before they bottom out.
Phone: (404) 618-0355
© 2025 Fair Assessments, LLC. All Rights Reserved.