ORLANDO -- It will be 2005 before the office market sees a surge of demand, according to a panel of industry experts at the Mortgage Bankers Association’s Commercial Real Estate/Multifamily Housing Convention & Expo 2004, taking place in Orlando Feb. 1-4.
An overhang of sublease and shadow space will have the market struggling to absorb the overcapacity this year. “2004 will see some slack taken from the rope,” says Stewart Calhoun, an investment broker in Cushman & Wakefield’sservices group But 2005 will be the surge ahead.” Calhoun favors value-add office properties “that have some leasing to be done.”
Likewise, Susan Hudson-Wilson, founder and CEO of Property & Portfolio Research, advises investors to “buy vacancy,” especially in the office market. “If you don’t get your mitts on it, it will be gone,” she says.
On the retail side, malls face the biggest challenge, the panel concluded. Malls in the Southeast especially are experiencing tremendous retailer turnover, according to Calhoun.
“They need to re-anchor themselves,” Hudson-Wilson explains. “Federated-type anchors, including Lord & Taylor, aren’t coming back.”
According to Hudson-Wilson, landlords should replace these anchors with one of the 50 or more value retailers, such as Target. Despite the potential costs of floor plate renovations, the inline stores will gain revenue once the switch is made. “America has voted – it won’t pay too much for anything,” Hudson-Wilson says.