Okay, maybe he didn't come directly at us. But CBRE chairman John O’Bryan does think everyone needs to not get carried away by a news headline. Instead, solid research will reveal the truth about current market conditions. (We still friends, John? Facebook or otherwise.)
John was speaking at the CBRE 2014 Market Outlook Breakfast in Toronto. Afterwards, he chatted with us about new office construction; he said focusing on numbers that show a market that’s softening leads to simplistic conclusions. The number of factors interwoven in a market analysis are “very complex.” Naturally a market adjustment follows an aggressive build cycle like this, along with a debate over how well landlords running older buildings will conform.
A lot of the capital flowing into office is institutional capital, and as John (snapped with CBRE's Peter Senst) tells us, “these are very sophisticated people with very large portfolios that have seen enormous increases in value these past four to five years, so they can take on a level of development risk.” Two big factors are at play, he says: Landlords see they can build a new tower, put it into a portfolio, and get better returns than if they bought the same asset; on the other side, tenants want these new buildings.
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