Office-Leasing Rebound Could Be Deceiving
This was the headline of a recent Wall Street Journal article and I couldn’t agree with it more. I’ve personally seen leasing activity pick up, a lot, from where we were last year. However, despite the new activity, the vacancy rate here in Atlanta has continues grow. Why? A very simple reason and something that is alluded to in the article, majority of tenants are not growing. Last year these same tenants sat on the sidelines to make sure the economy would start to recovery this year. Now that the economy is slowing recovering, the tenants are taking advantage of the office market but not growing. So what’s happening? Basically tenants are playing a form of musical chairs, plus finding ways to reduce their office space footprint, and therefore activity is picking up, but this activity is not improving the office vacancy rate here in Atlanta.
Even as the office market enjoys a rebound of leasing activity, some businesses are giving landlords the shivers by figuring out how to use less space per employee.
Companies that sat on the sidelines during the darkest days of the economic downturn are increasingly making leasing commitments. In the 12 months that ended June 30, office tenants signed 161.3 million square feet in leases nationwide, according to Studley, a commercial real-estate brokerage firm. That is a 5.7% increase over the 12-month period ended in March.