Downtown office vacancy

Issues concerning Downtown as described by the Downtown Council. River to 31st Street, I-35 to Bruce R. Watkins.
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normalthings
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Re: Downtown office vacancy

Post by normalthings »

JLL reporting that CBD is still up for the year. Plaza down just 1%. Plaza and CBD Class A still doing strong as well.

https://www.us.jll.com/en/trends-and-in ... ce-insight

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normalthings
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Re: Downtown office vacancy

Post by normalthings »

earthling wrote:
Sat Jul 11, 2020 6:59 am
Q2 Office Report from CBRE, which tracks a bit less metro space than Cushman Wakefield and much less than Colliers.

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https://www.cbre.us/research-and-report ... ew-Q2-2020
Report says Spring Venture Group is hiring 300 FTE downtown.

earthling
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Re: Downtown office vacancy

Post by earthling »

normalthings wrote:
Tue Jul 21, 2020 9:24 pm
JLL reporting that CBD is still up for the year. Plaza down just 1%. Plaza and CBD Class A still doing strong as well.

https://www.us.jll.com/en/trends-and-in ... ce-insight
Though down for Q2 and downtown with more loss than any other part of metro according to JLL. Time will tell as more leases are up for renewal. Other cities are getting hit hard by increase in subleasing recently. Might hit KC as well.

earthling
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Re: Downtown office vacancy

Post by earthling »

Colliers' Q2 report is out. They track the most space across metro (including company owned buildings apparently). They show downtown lost about 150K absorption for Q2 and about 160K lost for the year. Vacancy is only 7.2%, cross-referencing with the other reports, it implies that a lot of company owned buildings aren't subleasing (yet, expected later). Considering how overbuilt KC metro is, the vacancy is quite low/good, even after factoring initial COVID hit. But will take time to see how lease renewals play out.
The real impact of the COVID-19 pandemic is expected to be realized in the last half of 2020 and early 2021, however, the effects were felt as early as this past quarter.

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https://www2.colliers.com/en/Research/K ... ice-Trends

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normalthings
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Re: Downtown office vacancy

Post by normalthings »

One of the companies I was working with has put a sizable downtown expansion on pause but still plans to move forward with it once things settle down. Innovation happens in person, not online is the thought.

earthling
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Re: Downtown office vacancy

Post by earthling »

Cushman Wakefield Q3/2020 office report is out. As expected, office space usage continues to decline as work from home becomes more prevalent/permanent.

Net absorption losses worse in JoCo than KCMO and Crown Center/Xroads hit harder than Loop...
https://cw-gbl-gws-prod.azureedge.net/- ... q32020.pdf

Colliers' report will be more comprehensive (more office buildings tracked) but takes a month longer to release report.

earthling
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Re: Downtown office vacancy

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CBRE Q3 report says downtown and metro office space use didn't decline as much as Cushman Wakefield says, but still declining. CBRE tracks Class C space, doesn't appear that Cushman tracks Class C. And Cushman apparently tracks a broader type of office space. Class A/B apparently declining more than C is. Colliers report probably won't be out for a month.

https://www.cbre.us/research-and-report ... ew-Q3-2020

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normalthings
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Re: Downtown office vacancy

Post by normalthings »

At the downtown office summit today, Swiss RE hinted that COVID adjustments at the firm will see their NYC office shed employees to KC (their second largest US office).

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Re: Downtown office vacancy

Post by flyingember »

normalthings wrote:
Tue Nov 10, 2020 4:37 pm
At the downtown office summit today, Swiss RE hinted that COVID adjustments at the firm will see their NYC office shed employees to KC (their second largest US office).
A reminder, this would have been to Overland Park until a few years ago.

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normalthings
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Re: Downtown office vacancy

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WSP is expanding their office in the RM. I doubt it has much of an impact but good to hear.

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Re: Downtown office vacancy

Post by aknowledgeableperson »

My daughter's downtown employer is giving up about 25% to 33% of their lease space. Her and others in her unit have worked from home since March and that will likely continue for some time. Before Covid there was talk some of her fellow employees and her unit would be moving to Lees' Summit. She was looking forward to that since it would be close to where she lives.

earthling
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Re: Downtown office vacancy

Post by earthling »

Colliers' Q3/2020 report, which tends to be most comprehensive report...
https://www2.colliers.com/en/research/k ... ice-trends

Shows downtown Q1/2/3 negative absorption worse than Cushman report, -325sqft of which 121K is Class A. Not good, especially relative to rest of metro, which oddly shows positive absorption, opposite of Cushman report. Colliers tracks some owner-occupied buildings though, a much wider variety of space. And % vacancy is skewed lower by Colliers because of that.

earthling
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Re: Downtown office vacancy

Post by earthling »

Cushman Wakefield Q4/2020 report is out, which does not track the most space (Colliers does). Greater Downtown had negative 233K sqft absorption for the year, vacancy increasing to 17.7%. Metro nearly had 1M negative absorption, vacancy increasing to 16.4%. South JoCo took the biggest hit.

https://cw-gbl-gws-prod.azureedge.net/- ... cc6ecaa661
Outlook
• Expectations for leasing activity and absorption in the first half of 2021 remain modest as businesses emerge from the pandemic.
• Tenants looking to adjust traditional in-office hours for employees may look to slightly shrink their footprint, but will demand higher quality, more flexible spaces.
• As speculative space delivers, the overall Class A asking rate will rise although legacy Class A buildings will be unlikely to demand an increase.

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Re: Downtown office vacancy

Post by flyingember »

This quote shows something too many people don't understand (ex. on Twitter)
• As speculative space delivers, the overall Class A asking rate will rise although legacy Class A buildings will be unlikely to demand an increase.
Replace this with "housing" if we build enough

• As speculative housing delivers, the overall Market asking rate will rise although legacy housing buildings will be unlikely to demand an increase.

earthling
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Re: Downtown office vacancy

Post by earthling »

Pretty good chance we'll see more conversions to flex space (like WeWork did to a couple Lightwell/City Center Sq floors), but also some in larger blocks for companies that intend to stick with high % WFH post-COVID and will want more flexibility yet possibly entire floors. Overall though as/if office space demand declines long term, more conversions of Class C/B buildings to housing seems probable.

edit: BTW, as an offshoot to co-working spaces (like WeWork/PlexPod), there's a trend in Europe for 'co-living' spaces. Tend to be almost entirely studios with bathroom, maybe kitchenette and then lots of highish end common spaces like several shared living rooms, a couple large modern shared kitchens with many stoves, and high end condo amenities. Sort of college dorm room meets high end condos, buildings may target by certain age ranges or professional interests. The shared spaces also address a growing trend of loneliness with singles. And great for digital nomads as there's no VAT as with hotels/hostels. Not sure if this has hit US much (a few cities have) but would think it will fairly significantly, at some point.

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Re: Downtown office vacancy

Post by Riverite »

earthling wrote:
Wed Jan 13, 2021 10:26 am
Pretty good chance we'll see more conversions to flex space (like WeWork did to a couple Lightwell/City Center Sq floors), but also some in larger blocks for companies that intend to stick with high % WFH post-COVID and will want more flexibility yet possibly entire floors. Overall though as/if office space demand declines long term, more conversions of Class C/B buildings to housing seems probable.

edit: BTW, as an offshoot to co-working spaces (like WeWork/PlexPod), there's a trend in Europe for 'co-living' spaces. Tend to be almost entirely studios with bathroom, maybe kitchenette and then lots of highish end common spaces like several shared living rooms, a couple large modern shared kitchens with many stoves, and high end condo amenities. Sort of college dorm room meets high end condos, buildings may target by certain age ranges or professional interests. The shared spaces also address a growing trend of loneliness with singles. And great for digital nomads as there's no VAT as with hotels/hostels. Not sure if this has hit US much (a few cities have) but would think it will fairly significantly, at some point.
I thought the new development in west side was doing Coliving

earthling
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Re: Downtown office vacancy

Post by earthling »

This mentions Plaza West, not sure if with common kitchens...
http://baarchitecture.com/news/co-livin ... nsas-city/

There's a lot of home conversions to co-living in US and KC had Startup Village but not quite the same as what's going on in Europe that targets just about every demographic, which I would think will mature in US at some point. Chicago has one on par with Euro style, with over 100 units and common kitchens.

Walker
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Re: Downtown office vacancy

Post by Walker »

Copaken reporting that Town Pavillion is around 90% leased. That has to be around the highest its been in a long while.

earthling
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Re: Downtown office vacancy

Post by earthling »

^One possible positive trend that might happen for downtown even if overall office demand shrinks...

As leases expire over time, for some companies needing less space due to relatively more WFH employees, they may upgrade to less space in a newer/upgraded Class A building (or WeWork type flex conversions). At least those willing to move. That might allow for new Class A construction, maybe, however potentially a decrease in overall space as some Class B/C buildings convert to residential. Just a possible scenario, not implying likely.

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normalthings
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Re: Downtown office vacancy

Post by normalthings »

earthling wrote:
Thu Jan 14, 2021 6:08 pm
^One possible positive trend that might happen for downtown even if overall office demand shrinks...

As leases expire over time, for some companies needing less space due to relatively more WFH employees, they may upgrade to less space in a newer/upgraded Class A building (or WeWork type flex conversions). At least those willing to move. That might allow for new Class A construction, maybe, however potentially a decrease in overall space as some Class B/C buildings convert to residential. Just a possible scenario, not implying likely.
If you cut your space requirement, you can spring for much nicer locations & buildings. I see it eventually happening in NYC and San Fransisco.

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