The Continuing Flight to Quality, by Cassidy Turley
According to the February 2013 Cassidy Turley U.S. Macro Forecast report, property markets are clearly on the mend. However, the flight to quality is not abating and will continue through 2013. Since 2010, demand for Class A office space has accounted for 70 percent of total net growth in the United States.
Other takeaways include:
- Businesses are generally leasing 20 to 30 percent less office space per employee vs. trends observed prior to the recession.
- The flight to quality also applies to the industrial markets. In 2012, Los Angeles, Nashville, St. Louis, Columbus and Charlotte all experienced near-record levels of demand for high-quality warehouse and distribution center product.
- High and low-end retail stores are expanding their footprint, while mid-priced retailers are struggling. Urban retail space is generally seeing strong demand and rent growth, but the further one travels away from the core of a city, the emptier the buildings get.
- The capital markets are riding a three-year wave into 2013. Sales of significant commercial real estate properties in the United States reached $283 billion in 2012, an increase of 24 percent from 2011. Since 2010, sales volume has been increasing at an annual rate of 67 percent.
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