| Property & Portfolio Research (now a division of CoStar) doesn?t manage CRE investments, thus its 75 debt and equity researchers in Boston and London can make objective forecasts, analyses, and credit-risk assessments. This means, try as we might to ignore its findings (eg, more office pain on the horizon), we can't. Turning off your monitor is only a temporary solution. |
| We snapped director Hans Nordby with Boston analyst Mark Hickey, who tells us companies occupying pre-recession, pre-layoff offices have extra SF they're likely to shed as leases roll over. That could boost office vacancies here to nearly 16%, up from about 11%. For the office market to tread water, the Boston economy would have to generate 31K new office-user jobs in the next two years, which they expect to happen. But other cities may have a higher hill to climb. Nationwide, if job growth does not accelerate, shadow space could push vacancies to nearly 20%, up from 13.4%. |
| The debt team: Steve Miller, Xiaojing Li, Pooja Sharma, John O?Callahan, and John Vecchione, which models the CMBS universe nightly to determine which vehicles offer the most risk and return. Steve says this cycle is distinctive because, with tight credit markets, about $1T of the $3.5T in debt coming due in the next few years won't secure refinancing. He doesn?t expect big banks to start lending for two-and-a-half years and smaller ones for perhaps seven years. How thorny this problem becomes depends on several factors, including: government action, global economics, and geopolitics. As a result, he says values of well-leased, quality core assets will rise but values of the remaining 80% will stagnate. |
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