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2008 Industry Outlook
Commercial Real Estate 2008
Softer side: Experts expect a stable year ahead overall.
 Tenants who need space aren’t likely to win concessions. — Angelo J. Bianco, senior vice president, Crocker Partners, Boca Raton [Photo: Daniel Portnoy] |
After several years of solid growth, the state’s commercial real estate market is slowing as the impact of Florida’s residential downturn spreads. But with only a limited amount of space coming online, the experts expect a stable year rather than a stall-out.
Developers and builders with projects in the planning stage should see more favorable pricing for construction management services, including labor and resources, says Clint Glass, senior vice president of operations at Balfour Beatty Construction in West Palm Beach. Land prices are also falling because there is little demand for large-scale commercial or residential projects in most of the state for the next few years.
Larry Richey, senior managing director of Cushman & Wakefield in Tampa, sees no danger of overbuilding in the state’s office market. “Overall, there’s about 10 million square feet under construction, and we need it,” he says. He notes an increase in sublease space throughout the state but says “the worst impact from the residential situation is behind us. I’m more encouraged about 2008 after the 2007 pause in the market.”
In central Florida, office vacancies have begun to rise, says Greg Morrison, principal and founder of Morrison Commercial Real Estate in Orlando. But with only about 1 million square feet of new office space due to be delivered in 2008, Morrison expects a stable year. “We have a good employment market, and the fundamentals are still in place,” he adds.
The lack of additional inventory should give south Florida’s office landlords the upper hand in 2008, with rents rising. A wildcard: In south Florida, several residential condominium buildings are being repositioned as office projects, which could change the supply-demand equation for office space, says David Dabby, president of the Dabby Group in Coral Gables.
