Florida’s commercial real estate market began its downward spiral a couple of years ago and continued through 2009 with slight signs of improvement. As the vacancies continue to rise, so does the rate of loans in default and the number of distressed commercial properties.
Despite the doom and gloom, some experts think there is an upside in the commercial leasing industry. While credit lines remain tight and more companies shy away from making large purchases, many are considering commercial real estate leases. Even then, the demand for commercial leases may not be significant enough to single-handedly pull the market out of its slump anytime soon.
In its 2010 Commercial Real Estate Forecast, Grubbs & Ellis real estate investment firm reviews the major real estate markets throughout the US, including Florida and specifically Broward County. They opine the commercial market in Florida will continue to face challenges in 2010 with regard to vacancies.
According to the report, commercial landlords in Broward County are entering 2010 facing significantly more vacancies than they saw at the start of 2009. The report estimates the vacancies are 3 times more than the preceding year.
An example of what landlords in Broward’s office sector may be facing in 2010 can be seen at the 110 Tower in Fort Lauderdale’s Central Business District. After the loss of two large tenants, AutoNation and Republic Industries, the 110 Tower ended 2009 with nearly 50% of its building vacant.
AutoNation, who once occupied more than 200k square feet in the 110 Tower, downsized to 100k in a newer building. And, Republic Industries gave up 60k square feet when they merged with Allied Waste in 2009.
The report points out that Broward County, when compared to the surrounding counties, has been able to keep its vacancies below other South Florida areas because of its ability to attract workers from nearby areas.
The report also states:
The big question for 2010 is whether or not another major tenant will downsize. The market’s vacancy could easily rise by 50 basis points or more above the forecast just by having a couple of large tenants pull out. Additionally, some of the large spaces available for sublease may roll back to the landlord.
Click here to read the entire report…
Don’t forget to return and let me know what you think about the 2010 Commercial Real Estate Forecast in the comments section.
