What do Michael Dukakis and JLL managing director Todd Burnette have in common? Both think 1988 was a "very challenging year." For Todd, it was the last real estate bust in Forth Worth, with office properties climbing to 19.5% vacancy. At the recent Tarrant County Commercial Real Estate Forecast, he said the CBD vacancy rate is more than 17% and will reach that 19.5% by year's end. His advice for tenants: enhance non-economic lease provisions and upgrade space and location. For landlords: work renewals hard and early.
We snapped a pic of some of the good news in the CBD: The City Center towers, which Todd says have held rents and are still at 94% occupancy. His forecast: most Fort Worth landlords will remain stable; effective rents should level out this year, while vacancy rates will peak in the second half in the year; office fundamentals will likely lag 12-18 months behind recovery in the economy with further job losses expected.
Here's another salmon swimming upstream: Carter Burgess Plaza. While investment sales cratered in ’09 (office sales down 81%) CBP was part of the 17M SF Crescent Real Estate Holdings portfolio sale to Barclays Capital and Goff Capital in November. The building is 96% leased and was aggressive in deals, recently signing Jackson Walker and renewing the Petroleum Club. The crystal ball is still a bit fuzzy, Todd says, but the good news for 2010: financial crisis has been averted; pace of job losses should slow; foreclosures will push values down; and consolidation and acquisitions should add more space. Simply, he says, it’s a year of uncertainty.