Commercial Real Estate Markets Slow Down

Apr 16, 2001, 01:00 ET from Colliers International Research

    BOSTON, April 16 /PRNewswire/ -- Downtown office markets are remaining
 remarkably strong, in spite of some key indicators of a market slow down.  Top
 downtown (CBD) markets held up well during the first quarter, however the
 level of absorption and leasing volume have both decreased significantly
 during the first quarter of 2001, according to a survey of commercial real
 estate markets by Colliers International.  In addition, the amount of sublease
 space is surging, but most of that space is in smaller blocks (less than
 15,000 square feet) and is available in fringe areas for short terms.
     "There is uncertainty in commercial real estate markets in North America
 as the US economy slows down," commented Ross Moore, Vice President and
 Director of Research for Colliers International, a global commercial real
 estate firm with 255 offices worldwide.  "Prospects for the second quarter and
 the balance of the year are now in question.  The technology and financial
 services sectors are feeling the brunt of the slowdown," he added.
     According to survey results, the two major trends driving this first
 quarter slowdown are a slight decline in rents and a sharp increase in
 sublease space.
     Rents flat or down only slightly. -- With vacancies rising, particularly
 in the suburbs, the days of record rental rates are over.  The cost of space
 is the paramount concern of the prospective tenant, and pent up demand has
 more or less dissipated.  However, despite the slowing market conditions,
 rents in downtown markets are off only about 1 - 2%, while suburban markets
 are down 5% and in a select markets down as much as 10%.
     Sublease space increases sharply. -- Technology companies are putting the
 most sublease space on the market, but growth is still evident.  The factors
 contributing to the wave of sublease space include both layoffs and the
 diminished need for expansion space.  Sublessors can often still profit from
 subleasing, but the lease must be 18-24 months old in order to see the best
 return.
     Colliers International is a partnership of real estate firms with
 8,900 employees in 255 offices in 51 countries.  As a corporation of
 independently-owned firms committed to delivering superior services, Colliers
 partners are the leading commercial real estate firms in the markets they
 serve.  Colliers provides the control and accountability of a conventional
 corporation combined with the creative, entrepreneurial solutions that
 characterize the best local firms.  On a worldwide basis, Colliers manages
 465 million square feet and has revenue of $US 1.1 billion.
 
     Demand for Office Space
     Downtown Office (All Classes)
                                         ABSORPTION:           ABSORPTION:
                                         1ST QUARTER           AVERAGE FOR
                                            2001           2000 (per quarter)
     MARKET                                 (SF)                  (SF)
     Baltimore                               52,000                   43,000
     Boston                                -436,000                  583,000
     Dallas                                -279,000                  136,000
     Denver                                 -78,000                  166,000
     Houston                                 87,000                  192,000
     Los Angeles                            150,000                  -22,000
     Miami                                   39,000                    9,000
     New York (Midtown)                    -915,000                  361,000
     New York (Downtown)                   -294,000                1,005,000
     Philadelphia                           -71,000                  356,000
     Phoenix                               -160,000                  -46,000
     San Diego                             -104,000                  482,000
     San Francisco                       -1,688,000                  890,000
     San Jose                               -41,000                   65,000
     Seattle                               -378,000                  457,000
     St. Louis                               98,000                   94,000
     Toronto                                115,000                  785,000
     Washington                             991,000                  788,000
     

SOURCE: Colliers International Research SF = Square Feet

SOURCE Colliers International Research
    BOSTON, April 16 /PRNewswire/ -- Downtown office markets are remaining
 remarkably strong, in spite of some key indicators of a market slow down.  Top
 downtown (CBD) markets held up well during the first quarter, however the
 level of absorption and leasing volume have both decreased significantly
 during the first quarter of 2001, according to a survey of commercial real
 estate markets by Colliers International.  In addition, the amount of sublease
 space is surging, but most of that space is in smaller blocks (less than
 15,000 square feet) and is available in fringe areas for short terms.
     "There is uncertainty in commercial real estate markets in North America
 as the US economy slows down," commented Ross Moore, Vice President and
 Director of Research for Colliers International, a global commercial real
 estate firm with 255 offices worldwide.  "Prospects for the second quarter and
 the balance of the year are now in question.  The technology and financial
 services sectors are feeling the brunt of the slowdown," he added.
     According to survey results, the two major trends driving this first
 quarter slowdown are a slight decline in rents and a sharp increase in
 sublease space.
     Rents flat or down only slightly. -- With vacancies rising, particularly
 in the suburbs, the days of record rental rates are over.  The cost of space
 is the paramount concern of the prospective tenant, and pent up demand has
 more or less dissipated.  However, despite the slowing market conditions,
 rents in downtown markets are off only about 1 - 2%, while suburban markets
 are down 5% and in a select markets down as much as 10%.
     Sublease space increases sharply. -- Technology companies are putting the
 most sublease space on the market, but growth is still evident.  The factors
 contributing to the wave of sublease space include both layoffs and the
 diminished need for expansion space.  Sublessors can often still profit from
 subleasing, but the lease must be 18-24 months old in order to see the best
 return.
     Colliers International is a partnership of real estate firms with
 8,900 employees in 255 offices in 51 countries.  As a corporation of
 independently-owned firms committed to delivering superior services, Colliers
 partners are the leading commercial real estate firms in the markets they
 serve.  Colliers provides the control and accountability of a conventional
 corporation combined with the creative, entrepreneurial solutions that
 characterize the best local firms.  On a worldwide basis, Colliers manages
 465 million square feet and has revenue of $US 1.1 billion.
 
     Demand for Office Space
     Downtown Office (All Classes)
                                         ABSORPTION:           ABSORPTION:
                                         1ST QUARTER           AVERAGE FOR
                                            2001           2000 (per quarter)
     MARKET                                 (SF)                  (SF)
     Baltimore                               52,000                   43,000
     Boston                                -436,000                  583,000
     Dallas                                -279,000                  136,000
     Denver                                 -78,000                  166,000
     Houston                                 87,000                  192,000
     Los Angeles                            150,000                  -22,000
     Miami                                   39,000                    9,000
     New York (Midtown)                    -915,000                  361,000
     New York (Downtown)                   -294,000                1,005,000
     Philadelphia                           -71,000                  356,000
     Phoenix                               -160,000                  -46,000
     San Diego                             -104,000                  482,000
     San Francisco                       -1,688,000                  890,000
     San Jose                               -41,000                   65,000
     Seattle                               -378,000                  457,000
     St. Louis                               98,000                   94,000
     Toronto                                115,000                  785,000
     Washington                             991,000                  788,000
     SOURCE:  Colliers International Research
 
     SF = Square Feet
 
 SOURCE  Colliers International Research