Most Major Metros See Office Market Recovery

Real Estate Plays an Increasingly Important Role in Company Branding and Culture

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Sep 16, 2015, 12:45 ET

HOUSTON, Sept. 16, 2015 /PRNewswire/ -- The resurgence of the U.S. economy has driven strong performance in the housing and retail markets, but the office market has been slower to find its footing. During the first half of 2015, the trends have been mostly positive in the nation's largest metro areas, positioning the office market to continue gaining momentum in most metros, according to the third-quarter edition of "Insights + Trends + Opportunities," a publication by Transwestern and Delta Associates that features a review of how the economy is impacting commercial real estate and valuable information for commercial property owners, investors, tenants and developers.

The resurgence of the U.S. economy has driven strong performance in the housing and retail markets, but the office market has been slower to find its footing. During the first half of 2015, the trends have been mostly positive in the nation's largest metro areas, positioning the office market to continue gaining momentum in most metros. Download the full publication at http://twurls.com/insights3q15.

MARKET SNAPSHOT FOR MAJOR METROS

Net absorption was modest in most major metros during the first half of 2015. Dallas was the leading performer with 2.8 million square feet of positive absorption.
Office vacancy remains elevated in several major markets, particularly Philadelphia, Atlanta, Chicago and Los Angeles. San Francisco, New York and Denver maintain the lowest vacancy rates – below 10 percent – but all other major markets remain above 10 percent.
With direct average marketing rents above $55 per square foot, New York and San Francisco rents are far higher than those in any other major metro. No other major market has an average rent above $37 per square foot.
With 11.3 million square feet of space under construction, Houston and New York lead major markets as of June. In terms of space under construction as a percentage of the existing inventory, Houston and San Francisco have the highest figures at 4.8 percent and 4.4 percent, respectively.
Most major metros are in the early stages of market expansion at this time. The two outliers are Houston and Philadelphia. In Houston, a large supply of office space is set to come online, but a weakened economy is likely to limit absorption. Philadelphia has experienced weak rent growth and no pressure for new construction.
Markets that are able to increase their job bases in the professional, scientific and technical services sectors will experience stronger office markets.

REAL ESTATE'S ROLE IN COMPANY BRANDING

Progressive companies are recognizing that physical space plays a unique role in establishing and communicating a firm's brand.
45 percent of top Transwestern brokers surveyed responded that in more than half of their upcoming transactions, the company's image is a significant factor in its location decision.
18 percent said image is an important factor in all of their upcoming transactions.
60 percent responded that they believe an organization's real estate is equally important to or more important than marketing and advertising when it comes to communicating a company's brand.
Building owners that are capable of describing how their property will convey the personality of a potential tenant will gain an advantage over the competition.
Proactive owners may consider upgrading properties to appeal to tenants that are looking for a particular style of space.

THE RISE OF TRANSIT-ORIENTED PROJECTS

The popularity of transit-oriented developments is evidenced by the preleasing success of Transwestern Development Co.'s mixed-use development in Austin, Texas.
The Arnold, a multifamily and retail building, and office building at 1645 E. 6^th are located adjacent to the MetroRail's Plaza Saltillo station.
The multifamily portion of the development will consist of 346 residences ranging in size from 393-square-foot efficiency units to 1,738-square-foot two-bedroom/two-bathroom units.
Totaling 95,210 square feet, the office building has signed two major tenants: an entertainment-related company has leased 64,530 square feet, and a recruitment firm will occupy 22,072 square feet.
Retailers in the 9,600-square-foot street-level space were carefully selected to reflect the home-grown vibe of East Austin. Specialty retail tenants include Blenders and Bowls; Royal Blue Grocery; Gato Nero, an Italian restaurant; and bakery/deli from the owners of Gato Nero.

Download the full publication at http://twurls.com/insights3q15.

ABOUT TRANSWESTERN
Transwestern is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service – the Transwestern Experience. Specializing in Agency Leasing, Management, Tenant Advisory, Capital Markets, Research and Sustainability services, our fully integrated global enterprise adds value for investors, owners and occupiers of all commercial property types. We leverage market insights and operational expertise from members of the Transwestern family of companies specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 37 countries as part of a strategic alliance with BNP Paribas Real Estate. Experience Extraordinary at transwestern.com and @Transwestern.

Media Contact:
Stefanie Lewis
713.272.1266
[email protected]

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SOURCE Transwestern