U.S. Office Markets Have a Way to Go to Match Canadian Results, by Avison Young
Although tours and velocity have increased and several metro areas have moved into a condition of equilibrium, many major U.S. office markets remain oversupplied with tenant-favored conditions. Canada’s office markets — resilient during and since the recession — continue to sport relatively healthy market fundamentals; however, some major markets appear to be softening and turned in less-than-stellar performances in the first half of 2013. These were some of the key trends noted in Avison Young’s Mid-Year 2013 Canada, U.S. Office Market Report.
The annual report covers the office markets in 32 regions: Calgary, Edmonton, Halifax, Lethbridge, Mississauga, Montreal, Ottawa, Quebec City, Regina, Toronto, Vancouver, Winnipeg, Atlanta, Boston, Charleston, Chicago, Dallas, Denver, Detroit, Houston, Irvine, Las Vegas, Los Angeles, New Jersey, New York, Pittsburgh, Raleigh-Durham, Reno, San Diego, San Francisco, South Florida and Washington, DC.
“In the United States, the lack of clarity that existed prior to the presidential election unfortunately continues, and jurisdictions await the impact of higher taxes, sequestration, mandated spending cuts, and Obamacare. The March effective date, versus the January 1st date written into the Budget Control Act of 2011, also means that the impact horizon will stretch into 2014, and most likely beyond,” said Mark Rose, chair and CEO of Avison Young.
The report noted that the lingering storm clouds continue to impact the American, more than the Canadian, commercial real estate markets because an oversupply of office space weighs heavily on many U.S. markets. “In contrast,” said Rose, “despite moderating demand levels and modest shifts in vacancy, most Canadian markets are undersupplied – particularly in urban areas, thus escalating construction levels. Keep in mind, the Canadian market has been on quite a run, and it would not be entirely surprising to see it lose some momentum. In short, the U.S. markets have a ways to go before reaching the level of success that Canadian markets have enjoyed since coming out of the recession.”
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