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Instability Continues in Larger Full Service Real Estate Firms
July 2010
The Great Recession has put the commercial real estate industry into a state of flux not experienced in decades. News filters into the market everyday about the pending mortgage refinancing dilemma, drastically falling property values and increasing vacancy rates.
Conditions have also sent shockwaves through many of the country's large full-service commercial real estate firms as profits have dissipated and in some cases, turn-around agents have been hired. A frenzied game of musical chairs is being played out from LA to Miami as aggressive tactics are being taken to hire brokers away from competitors and consolidate offices across the country.
Brokers switching firms is not new to the industry. Today, it seems to be accelerating. In some cases, firms are deliberately coming after brokers who hold relationships with any company that demonstrates the potential to relocate or strike a new lease in the next couple of years. They are also seeking to snatch brokers who have experience in future growth sectors, like healthcare and energy. A byproduct of these moves is a further reduction in support staff for the firm being fleeced, who end up either laid off or following a favorite broker to a new firm. In short, things are all over the place.
Maintaining a sense a stability in the real estate services marketplace are small private firms focused on the needs of tenants. With a more specified approach to helping companies make crucial real estate decisions, these firms have been able to better sustain the pain of such a challenging economy. Like business consultants, boutique tenant representatives provide benefit between transactions and demonstrate long track records under the same, locally-grown brand name.
Furthermore, boutique tenant representation firms draw 100 percent of their revenue from servicing tenants, whereas industry estimates agree that the majority of full service companies receive close to 70 percent of revenue from landlords, proving how challenging it can be for such firms to maintain an operation without conflicts of interest relative to space recommendations for tenant clients.
The state of the market does not appear to be changing right away. In conjunction, expect more broker swaps and operational question marks to continue within the full-service partition of the industry. However, those firms that remain small and specialized are primed to offer a high level of market insight and professionalism to companies tired of the nationwide run-around. |
Costar Reports Office Markets Have Bottomed
By Mark Heschmeyer
Costar Advisor
May 26, 2010
Fundamentals in U.S. office markets appear to have stabilized and are headed toward an expected recovery, according to CoStar Group in its The State of the U.S. Office Market: Mid-Year 2010 Review & Forecast. In its detailed quarterly analysis of the U.S. office market, CoStar Group confirmed positive net absorption for the quarter and office vacancy rates that appear to have peaked and are no longer rising. "As we anticipated two quarters ago, it now appears we have hit..."
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Population Growth is a Good Thing
By Beverly Kerr, Chamber Vice President of Research
Austin Chamber of Commerce
June 2010
In May, the Brookings Institute released its study of The State of Metropolitan America. This report projects what we can expect to see in the 2010 Census. The US Census Bureau has now released their last population estimate for places, covering 2009 before they begin to release the actual 2010 census results in December. Every decade, as the census results are released, significant changes are made in where business choose to build, expand and relocate based on the data and indicated consumer and population trends. Beverly Kerr with the Chamber of Commerce, reports on this last census estimate and how Austin and Texas rank.
Read More: https://app.e2ma.net/app/view:CampaignPublic/id:26685.8481819880/rid:83485d8926d8da05ddac6155b3d2cfdd |
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Real Estate Indicators Can Offer Insights Into the Economic Cycle
By Owen Rouse Jr.
Maryland Daily Record July 16, 2010
Double dip? Trickle up? Jobless recovery? Confusion and uncertainty are the sidecar buzzwords that seem to describe the current state of the economy.
What are the signs that we actually may have turned the corner? I see two categories of indicators - one of them specific to commercial real estate.
The first set tracks the macro picture and generally is followed by economists:
1. Rising interest rates
2. ISM index
3. Corrugated boxes
4. Unemployment
5. Retail sales
The second set is real estate-specific and is tracked closer to ground level:
6. Real estate activity in chronically vacant spaces
7. Rent concessions waning
8. Short-term leases acceptable
9. Professionals busy again
Overall, real estate is a cyclical industry with a longer cycle time (and longer recovery time) than the stock market. In some respects, it is easier to "time the market." Indicators are just that -- indicating what lies ahead -- but with no specific reference to exactly how far ahead. Pay attention to the signs but ride the cycle as well.
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Austin's Applied Materials hiring 200 workers
Austin American Statesman
July 27, 2010
Applied Materials Inc. is adding regular full-time jobs in Austin for the first time in three years.
The largest maker of semiconductor manufacturing equipment said it is going to add more than 200 jobs over the next three months, of which more than 100 will be new full-time positions primarily involved in manufacturing and logistics.
The remaining jobs will be for temporary contractors.
Company spokesman Steve Taylor said Applied is responding to a strong rebound in global chip manufacturing, which continues to grow in strength.
Austin is the company's primary center for chip equipment manufacturing. Applied has 1,500 full-time workers and 750 contractors here.
The company had about 2,500 full-time workers in Austin at the end of 2007. |
Austin tenth fastest-growing exporter in U.S.
Austin Business Journal
July 26, 2010
Austin's rate of exports increased 16 percent per year between 2003 and 2008, ranking it the tenth fastest-growing exporter in the U.S., according to a report from the Brookings Institution.
Computer and electronic products were listed as the primary industry for export growth in the Austin-Round Rock region, likely due in large part to Round Rock-based Dell Inc. That sector experienced an average 42 percent increase in exports per year in the five years included in the study.
Tech industry exporting from Austin, much of which went to China, totaled about $10.2 billion in 2008.
The nation's 100 largest metropolitan areas generated a total of more than $1 trillion worth in exports in 2008, according to the report, with Houston coming in as the fourth largest.
The Bay City generated $51.6 billion in exports in 2008.
New York topped the list with $85.16 billion in exports, followed by Los Angeles and Chicago. Austin was listed as No. 26 overall. |
Austin Named 3rd Most Recession Proof City in America:
Two and a half years after the Great Recession began, the nation's economic recovery remains jobless and seems more fragile than ever. Inflation-adjusted gross domestic product (GDP) grew at a moderate 3.0 percent annual rate in the first quarter of 2010, down from a 5.6 percent annual growth rate in the last quarter of 2009. Housing markets weakened, and the expiration in April of federal homebuyer tax credits could lead to further weakness later this year.
Few private sector jobs were created in May, as nearly all the employment growth that month was due to temporary hiring for the Census. The seasonally adjusted national unemployment rate fell from 9.9 percent to 9.7 percent in May, but that was mainly the result of a decline in the number of people looking for work. Nearly half the unemployed were jobless for more than six months. The data available for the nine quarters since the start of the Great Recession indicate that the nation had recovered a smaller percentage of jobs than at a corresponding time after the start of any of the previous three recessions.
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