Costar in its "The State of the U.S. Office Market: Mid-Year 2010 Review & Forecast" reports that the U.S. office market has bottomed and is headed toward recovery. Danburg Management, as a major player in the Boca Raton office market, sees this as great news. But what does that mean for local office tenants and to the commercial real estate community?
To start, Costar has emerged as the leading source of commercial real estate information in the U.S. A majority of the top national brokerage firms and institutions rely on their information, so we can assume this information is credible, so if Costar has spotted a trend, we can assume that there is something to it and a market turn has begun.
According to Costar, professional and business services added 360,000 jobs in the last three quarters and government workers increased by 290,000. Layoffs in the financial services and information sectors have only amounted to about 161,000 positions. While unemployment may still be rising in some sectors of the economy, the sectors that drive demand for office space are now growing. In addition, one of the effects of the current economic downturn is that developers have halted or delayed most of the new office projects. A report from Prudential states "A lack of construction, due to the lack of funding, could keep new supply from hitting the market for up to five years." Costar believes the combination of positive absorption along with limited new construction will drop the national vacancy rate, currently at 13 percent, to 11 percent by 2013.
In Palm Beach County, which was more vulnerable to the downturn in the housing market, office vacancies are higher than the national average, but they also declined from 24.5 to 23.5 percent in the second quarter of 2010. Meanwhile, asking rental rates increased for the first time in six quarters. The Boca Raton market remains a bit behind the curve as vacancies increased slightly from 24.2 to 24.6 percent in the second quarter.
At Danburg Management we have always outperformed the market with a "hands on" approach to providing quality workplaces at an excellent value. We are therefore less susceptible to market fluctuations. Still, we understand that to compete in today's market, we need to match the prices of some of our less successful competitors. If you need office or warehouse space, we are making great deals for quality tenants. Please call or e-mail for more information, or visit us at www.danburg.com.
7700 Congress Avenue Suite 3100
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