Real Estate Forum - October 2008

cant impact in markets like New York City, Charlotte, NC and, to a lesser extent, San Francisco, which is a bit more diversified,” Sicola says. She points out that 60% of employment in the Big Apple is in finance and banking. “Having said that, we don’t know how many jobs will be lost in total, because some positions will be absorbed by other firms,” she relates. “But it’s sufficient to

“When you look at areas that are still quite active, it's the energy markets.”

JEFFREY M. FINN

NAI GLOBAL

say that New York and other markets entrenched in financial services will see more job losses through this year and next and vacancies will go up.”

Wong reports that Midtown Manhattan has a current vacancy rate of 5.3%, although that number could quickly change if a substantial amount of untenanted footage is put back on the market. The rate for Downtown is 7.1%. “We did see an increase between the first and second quarters, and that will probably continue as companies try to rationalize their space requirements based on the new economic environment,” he states. “Yet even though vacancy is going up, it’s still pretty tight. If anything,

it’s going to free up opportunities for a few tenants that could not afford or find space in these markets.”

The situation in Charlotte, meanwhile, is a bit more uncertain. According to CBRE, Charlotte’s metro office vacancy rate rose from 10.9% in the first quarter to 12.1% in the second. However, the CBD registered a miniscule 1.1% vacancy in Q2.

Earlier this month, Wells Fargo & Co. agreed to buy Wachovia Corp. for $15.1 billion, winning its battle for the Charlotte-based institution with Citigroup. According to a report in GlobeSt.com, Wachovia will keep its headquarters in the city as a base for its East Coast retail, commercial and corporate banking operations.

Hansen points out that Charlotte is home to some of the largest banks in the US. “It’s an interesting market because it’s been an up-and-comer for the past five or six years, maybe even longer, because you’ve got three major banks headquartered there,” Hanson says. “Yet it’s a mixed bag. On one hand, some financial institutions, particularly Bank of America, are getting stronger, but they have their own issues to deal with and I’m not sure how that’s going to play out. That has a more pronounced effect on the office segment as opposed to the other property types.”

Even though its backbone is IT, Seattle could feel the fallout from the banking business woes, since Washington Mutual’s headquarters is there. “The shakeout of Washington Mutual will have a major impact, particularly on the Downtown office segment of the market. It will have less of an effect on other segments like industrial, retail, hotel and apartments,” Hansen says.

Marcus & Millichap predicts that office-using employment growth in the Seattle area will dive from 2.3% in 2007 to a mere

6th Annual

SAVE THE DATE

DECEMBER 3, 2008

Hyatt Regency Irvine

Hosted by Real Estate Forum, Real Estate Southern California and GlobeSt.com

There are more challenges than ever facing the commercial real estate market…..Now is the time to be informed

The nation is going through a financial crisis and the commercial real estate market is feeling the effects! RealShare Orange County will aim to provide valuable information to addresses the challenges facing the industry. Leading industry experts will share their thoughts on the current and future state of the market and how to position yourself to continue to succeed.