(MENAFNEditorial) Tech Sector Driving Office Demand
The tech sector drove U.S. office fundamentals during the third quarter of 2017, according to Cushman & Wakefield's recent report on the sector. Demand was strong enough in some markets to keep the national market stable during the past three months.
In 2016, Seattle was the only technology hub to rank in the top 10 cities for space absorption, said Cushman & Wakefield's Revathi Greenwood, head of research, Americas. So far in 2017, the top 10 cities for office absorption included Santa Clara, Brooklyn, Seattle, Raleigh/Durham and San Diego — all tech-focused markets. Each has seen more than 1 million square feet of space absorption thus far, with Santa Clara reaching nearly 3.4 million square feet.
However, the strength of these and other top markets — including Midtown Manhattan and Dallas — was offset by negative absorption elsewhere. Of the 87 markets tracked by Cushman & Wakefield, 27 markets posted a combined total of 5.3 million square feet of negative absorption during the third quarter, compared with 3.4 million square feet of negative absorption in the second quarter.
Cushman & Wakefield also tracks about 104 million square feet of new office development (representing 2 percent of total U.S. office inventory) in 87 markets across the U.S. That figure is down from nearly 109 million square feet at the end of the second quarter, but still marks the sixth consecutive quarter that the pipeline has exceeded 100 million square feet.
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We Won't Be Rebuilding Houston Any Time soon
In Houston, we have a problem. It's a crisis that will impede the reconstruction of our nation's fourth-largest city. The problem isn't capital, though. It's labor.
Here's what federal lawmakers need to understand: If Congress gave the Gulf Coast every dollar it needs to rebuild tomorrow, the construction industry simply would not find enough workers to keep up with demand.
Even before Hurricane Harvey made landfall, 69 percent of Texas contractors had trouble filling jobs. Now, it's estimated that 200,000 Houston homes will require work or complete reconstruction. Who will build these houses? What about the commercial infrastructure and public schools, highways and bridges that also sustained so much damage?
We face an infrastructure deficit in this country totaling $2 trillion over 10 years. The storms have added tens of billions to this figure. Lawmakers focus on who's going to pay for all of this, but they also must think about who's going to build it.
This problem is one that plagues the whole nation, and it's effectively 'corked our economy. We're stymied. We're stifled. Right now, the largest construction companies in America are turning away hundreds of millions of dollars in work every quarter because they don't have enough bodies on their crews. The National Association of Homebuilders reports that 77 percent of U.S. builders can't find enough people for their framing teams. Sixty-one percent can't find enough drywall installation workers. The number of construction jobs available in the United States rose in June, and it increased again in July.
62 More Malls Won't Be Open on Thanksgiving
Bargain hunters looking to blow off Thanksgiving for pre-Black Friday deals are going to have a harder time this year.
CBL Properties has announced none of its 62 malls around the country will be open on Turkey Day 2017. The announcement follows similar decisions by many retailers.
This is the second year CBL has opted to keep its malls closed on Thanksgiving. The decision, it says, was based on feedback from retail partners, employees and customers, who supported the decision last year. (Stores that are attached to the malls, but have exterior entrances, such as department stores and movie theaters, have the option of remaining open.)
It's a reversal for CBL locations. Just two years ago, the mall opened at 6 p.m. on Thanksgiving in hopes of luring in shoppers. And it has done so, welcoming tryptophan-stuffed shoppers, since 2012.
Office Landlords Discover the Consumer
The office market has seen plenty of innovation in recent decades, from the rise of real estate investment trusts to online databases like CoStar. But landlords have made little progress in one arena: using new technologies to appeal to tenants.
'We spend a lot of time on the analysis of our assets, a lot of time on how well they are performing and I think really little time on the end user, Lisa Picard, who manages the Blackstone Group's office portfolio, said at the MIPIM Proptech summit Wednesday. But now that is starting to change.
Ric Clark, Brookfield Property Partners' real estate head, argued that the industry has been innovating for two decades. 'The thing that I think is new is the customer-facing innovation, he said. In one recent example, Clark said, a major tenant called him with a proposal. Wouldn't it be more efficient if the landlord made common meeting rooms or hospitality space available to all tenants, which they could rent on a short-term basis? 'They connected me to Convene, and next thing you know we're an investor in Convene, he added, referring to the meeting-room and common-space startup that raised $68 million in a Series C round earlier this year.
WeWork, which has built a business model on its appeal to tenants and invested heavily in consumer-facing technology like its member app, is another example.
'I think the real estate industry wants to innovate, said Boston Properties CEO Owen Thomas. 'The key is finding those things that really have application that's valuable. And sometimes they don't. I think it's challenging.
For Some Struggling Malls, Churches Offer Second Life
Neighborhood shopping centers battered by store vacancies are finding solace in churches.
As retailers consolidate and shrink the number and sizes of their stores, retail center landlords, especially in weaker markets, are being forced to consider a wider range of prospective tenants that might not fit the conventional retail mold. Among them: houses of worship.
'Having a church becomes an asset because it creates a mixed-use space, said Rodney Arnold, pastor at OneLife Church, based in Powell, Tenn. The church leases space both in Powell Place Shopping Center and at a building near Knoxville Center Mall in Knoxville.
Until recently, property owners have turned mainly to theaters, restaurants, medical and wellness clinics, and bowling alleys to fill space formerly occupied by retailers that have been plagued by the shift to online shopping and changing consumer tastes.
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