Office markets looking sluggish through 2003, says C&W report
THE TOP 10 OFFICE MARKETS WILL continue to slow through 2003, according to a recent report by New York-based Cushman & Wakefield. The report assessed the outlook for the 10 largest office markets in the U.S. from fourth-quarter 2001 through the end of 2003.
“With the nation in the midst of a recession, the economies among the nation's Top 10 office markets are expected to slow through 2003 and will not match their robust growth of the past several years,” the report predicts.
The Sunbelt economies of Atlanta, Houston and Dallas will continue to outperform the older economies of the Northeast and the Midwest, according to Cushman & Wakefield. In terms of office-using employment growth, Atlanta will eclipse other metro areas, rising from an annual average increase of 2.7% over the last three years to a forecasted 3.7% rise from fourth-quarter 2001 through the end of 2003.
On the other hand, the report predicts growth in Dallas will slow from 4.9% to 3%, and San Francisco's growth will slow from 3.9% to 1.2% over the same time periods.
During third-quarter 2001, total inventory for the top 10 markets ranged from 100 million sq. ft. in Philadelphia to 600 million sq. ft. in the New York region. Washington, D.C., is the second largest market, followed by Chicago, San Francisco, Los Angeles, Dallas, Houston, Boston and Atlanta.
In general, the report says CBDs will outperform suburban markets through 2003, posting smaller increases in overall vacancy rates and stronger growth in overall asking rents. Through 2003, Washington, D.C. — driven by a diverse and growing private- and public-sector tenant base — is projected to be the strongest CBD office market among the top 10 markets.
Microsoft picks Jones Lang LaSalle for global property management deal
In a deal that includes 8 million sq. ft. of office space, Chicago-based Jones Lang LaSalle has been chosen by Microsoft Corp. to manage the software provider's worldwide real estate. The transaction excludes Microsoft's headquarters in the Seattle area, which the company owns and Dallas-based Trammell Crow Co. manages.
Jones Lang LaSalle will handle Microsoft's lease acquisitions, dispositions and renewals for a portfolio that includes property in the United States, Canada, Europe, the Middle East, Africa, Asia Pacific and Latin America. The three-year contract is expected to generate $3 million to $5 million in annual revenue for the global real estate services giant.
For Microsoft, the deal means improved efficiencies on a global level. “Utilizing a single service provider will allow our field real estate organization to operate at a more strategic level,” says James Ableson, manager of U.S. and international real estate for Microsoft.
The deal is part of a consolidation trend. Thomas Wilkinson, international director of Jones Lang LaSalle — who will manage the assignment as global account manager for Microsoft — says large, multi-national companies want to consolidate relationships. Jones Lang LaSalle itself has 40 strategic alliance clients, according to Wilkinson. “Companies are looking to hire global real estate servicers,” he says.
Fortress Development plans massive high-security campus
TO MEET THE NEEDS OF COMPANIES LOOKING FOR SECURE CORPORATE data centers that retain a traditional office appearance, Rockville, Md.-based Fortress Development Co. is planning a 425-acre data center and office community in Loudoun County, Va.
CyberPlex@Dulles, located at Route 28 and Route 7 in Virginia's tech corridor, is a $500 million mission-critical campus designed for government and corporate users that demand a high level of data security. The building will feature redundant power, fiber provision, concrete exterior panels, bulletproof ballistic glass and massive electrical densities.
CyberPlex@Dulles ultimately will include 2.4 million sq. ft. of build-to-suit office space and an 860,000 sq. ft. mission-critical data center. Baltimore-based RTKL Associates Inc. has been awarded the design contract for the 10-year project, the first phase of which is scheduled to begin in late 2002.
“The Sept. 11 attacks have forced companies to evaluate the security of their mission-critical spaces,” says Chris Epstein, president of Fortress Development. He says the company's design team is developing customized data centers with thick, impenetrable walls, raised floors and independent, redundant power sources. These fortress-like facilities are designed to house high-end computer equipment.