The Opportunity is Now

by CoyDavidson on November 24, 2009

Taking advantage of market opportunities in a struggling real estate market

The holiday season is here and 2009 will soon be history as we shut the door on an extremely challenging year for business. As we enter 2010, the mood is cautiously optimistic as the economy begins to show signs of life. We are all ready for a more vibrant economy and excited by the possibility. We can’t forget that we have been through recessions before and that there is opportunity in all market cycles.

The consensus among leading economists is that job growth will not return until at least the latter half of 2010. This is a point in time where strong commercial property professionals can be bring tremendous value to the corporate office and industrial tenant. In fact, that is exactly what most company’s need right now, an expert who can partner with them to align real estate with their business strategy and maximize the use of property in today’s economic climate before real estate markets begin significant recovery. This is where a strong partner like Colliers can be a strategic asset in helping clients capitalize on specific trends that have emerged as a result of today’s economic conditions. Over the past year many companies have taken a “wait and see” attitude when it comes to their real estate facilities.

Tenants should be reviewing their current leases, regardless of where they are in the lease term. With the increase in vacancy rates, landlords are more open to reviewing existing leases to keep quality tenants in their buildings. There are opportunities to renegotiate lease terms including duration, incentives and rental rates that create win-win situations for the both the tenant and the landlord.

Downward pressure on lease rates and an increasing supply of sublease space creates a competitive environment among landlords trying to attract new tenants and retain existing ones. In addition with downward pressure on construction costs, space can be built out for less today than the past few years.

In might be easy to take the attitude of “I will worry about real estate later next year or when my lease maturity gets closer”. In the last down cycle, some companies seized the opportunity and locked in low-cost options, protecting their future. Many others sat idle. In the words of Warren Buffet, “What we learn from history is that people don’t learn from history.” The natural inclination in this tough economy would be to “wait it out”.

Houston was recently ranked by Forbes Magazine as the 8th fastest recovering city in the nation. The opportunity is now, and at some point the door will begin to close. I suggest not only focusing solely on the challenges that exist today but also on the opportunities before us.

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