The 2008 NAIOP Twin Cities Office Market Update is Now Available

The 2008 NAIOP Twin Cities Office Market Update was given on November 20th and the news was all but great. Vacant space increased in 2008 and absorption is declining and this trend is likely to continue well into 2009. There are many factors affecting the market without including the financial markets, housing market, lack of available capital and increases in unemployment. The lack of funds to borrow is affecting all within the commercial real estate sector. Without funds to leverage business management and growth many companies are forced to downsize in order to save cash so that they can survive the current economic downturn. Owners are having trouble finding affordable financing to make sense of investment purchases which in putting a stop to sale transactions. Credit requirements are much tougher today and the debt to equity ratio is much lower meaning buyers have to come up with a lot more cash in order to purchase a building. Lastly, with companies downsizing, 2009 will bring a large amount of sublease space to the market. Not only will many of the existing vacancies remain but additional sublease space will add to the availability in the market. Hopefully the market will make a turn for the positive towards the end of 2009.