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As I’ve previously blogged about, the office real estate industry is in the doldrums. Like the general housing and investment property markets, the overarching cause is the crappy economy. But office properties have been hit much harder.
Not only are developers not interested in initiating new construction projects, but owners of new buildings that hit the market when the recession struck are now faced with the prospect of empty offices and unprecedented vacancy rates. Some have outright abandoned the completion of their projects while others have been forced to adopt stringent measures to meet their existing construction loans. While developers with pre-leasing commitments have scraped through this debacle, less fortunate players have had to turn over the office keys to their lenders.
With an economic recovery not looking very encouraging (or at the very least – speedy), the office construction industry is facing fierce pressure. Key office leasers like the financial services sector are jettisoning their leased space as fast they can, while other employers are doing everything they can to avoid renting out new space. Rents in prime areas like Wall Street have plummeted, while the high vacancy rates cast a gloomy outlook on the future.
To find out the current forecast on the future of the office construction industry, click here for an excellent Wall Street Journal article on the topic.