Global office markets will rebound slowly, according to Cushman & Wakefield's Global Office Forecast released this week, with many important markets ready to continue growing in 2012 and 2013. for sale apartments
While office markets around the world started the year strong, concern and uncertainty caused a major stumbling block in the third quarter, resulting in a cautious forecast for the coming year.
While growth forecasts have become more cautious, solid lease fundamentals and limited supply will keep global office markets afloat, with little or no new building scheduled for 2012 or 2013.
Leasing activity in 2012 might best be described as mixed. Markets reliant on government leasing will stall in the Americas, but emerging industries such as technology, healthcare, and energy will keep cities like San Francisco, Calgary, Houston, and Downtown Toronto afloat. While the European economy as a whole is projected to continue slow, Frankfurt, Munich, Paris, Istanbul, Stockholm, and London are likely to outperform other European markets. In Asia, growth in China's second-tier markets, as well as in nations where regional trade accounts for the majority of exports, such as Indonesia and Australia, is likely to increase.
Early in 2011, increased leasing activity had minimal effect on worldwide office rentals. As a result, the bulk of U.S. markets are not expected to see large rent increases until 2013. In the meanwhile, several European markets experienced strong rental increases in 2011, but many predict downward pressure on rentals to reappear if economic conditions do not improve in the near future. In Asia, the relationship between rental values and GDP growth and inflation will support modest growth.
Occupiers throughout the world are focusing on reducing expenses connected with corporate real estate while also beginning to adopt a more strategic approach to their real estate in order to generate value for their companies.
Organizations with many sites are centralizing functions to increase synergy, while sustainability, technology, and changing work habits have prompted many occupiers to adopt a "less space is more" strategy. Only 6% of Cushman & Wakefield's top global clients said they would significantly increase the size of their portfolio in the next 12 months, according to a recent survey, with 36 percent indicating moderate expansion, 33 percent indicating moderate contraction, and 24 percent indicating no expansion.
AMERICAS
While most office markets in the Americas are expected to slow in 2012, prime cities like New York, San Francisco, and Seattle in the United States, Calgary in Canada, and Mexico City, Santiago, Sao Paolo, and Buenos Aires in Latin America are expected to tighten even more once the economic uncertainty subsides.
Leasing activity will slow in 2012, compared to the pent-up demand levels witnessed in 2011, but absorption should remain favorable in most markets due to the lack of new speculative building.
In most markets in the Americas, rental rates will remain stable. In the United States and Canada, little new building means less competition for existing landlords, allowing them to maintain their asking rents. Increases in domestic consumption and commerce with Asia will counterbalance any declines in European demand in Mexico and South America, propelling corporate growth plans.
"By 2013, all key markets in the Americas are expected to be back on solid ground, with greater lease activity, improved absorption levels, and consistent demand," Maria Sicola, Executive Managing Director and head of Cushman & Wakefield's Americas Research, said. "An expansionary cycle is on the horizon, and companies that focus on long-term corporate plans and growth will benefit."
Natural-resource development, scientific research, professional and commercial services, technology, health care, education, and domestically consumed goods and services have all seen growth in recent years to sustain office market demand. As demand develops, a scarcity of high-quality office space will almost certainly result in much higher rental rates and, eventually, new development.