While the consensus view is rarely correct, for 2012 it is difficult to disagree with most economic forecasters who see little chance of any upside (or downside ) surprises and modest growth as the most likely outcome. Labor markets should improve, but it is highly unlikely that any industry (outside of technology) will be going on a hiring binge anytime soon with most employers opting to focus on increasing productivity through the better use of their existing labor pools. With businesses still waiting to see the fallout from the European debt crisis and a limited number of jobs created each month, leasing markets across most North America are expected to remain fairly benign. For most U.S. markets single digit vacancy rates are still a few years off and Canadian markets are likely to take a step back as the global economy decelerates and there is a subsequent cooling off in commodities and raw material prices. For tenants, the absence of new office development will eventually be an issue, but not during 2012 and doubtful even in 2013. Supply is rarely an issue for industrial users so the matter of new high-specification space is only applicable to office tenants, and should not be a concern until the end of 2013 and possibly even 2014. For tenants looking out the next two to three years the availability of office and industrial premises will gradually decrease but not to the extent that occupiers will be forced into unsuitable space at rents that are materially higher than exist today. A key concern, however, will be the limited number of office and industrial buildings that can be re-configured to handle new technologies, changed physical layouts and 24/7 work patterns. The preference by tenants to be in green (or carbon-neutral) buildings will only grow and will almost certainly put a premium on such space. The overriding trends for office and industrial leasing markets in the near-term are modest growth in the private sector, cutbacks by all levels of government in the public sector, a further push by companies to better utilize technology and reduce their space needs, and changing demographics that will leave the labor force growing by just a meager amount.
With more than 55 offices and $210 M in annual revenue, we are the largest tenant representation firm in North America. Through our alliance with Savills, we cover more than 255 locations in 40 countries. We hope you experience the difference when working with Cresa. We are the real estate firm that cares enough to listen and give you the Tenant's Advantage.
For more details on market conditions and how you can maximize your real estate options, contact your local Cresa advisor or email thetenantsadvantage@cresa.com.
Bill Goade
Chief Executive Officer
Cresa
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