Downtown office vacancy

[earthling]

CBRE Q3 shows negative absorption for Q3 essentially in Jackson Co and rest of metro positive absorption. With a slight net metro gain overall for first time in a while.


http://cbre.vo.llnwd.net/grgservices/se ... 718aa02b15

[earthling]

JLL Q3 national office report. They don't show availability rate that includes soon to be unoccupied space like CBRE shows above, which is higher than vacancy rate. By direct vacancy measurement, KC doing better than national avg as of Q3 - that's before more Cerner space now becoming available.

There's also a deceptive trend going on called 'concealed space' in several markets, where property owners are not putting all available space on market, so vacancy/availability rate is worse than what shows up in reports. IE, a building may have 300K sqft space available but only 150K is put on the market or reported. Unclear if that's happening in KC.

https://www.us.jll.com/content/dam/jll- ... 3-2022.pdf

[DColeKC]

JLL Q3 national office report. They don't show availability rate that includes soon to be unoccupied space like CBRE shows above, which is higher than vacancy rate. By direct vacancy measurement, KC doing better than national avg as of Q3 - that's before more Cerner space now becoming available.

There's also a deceptive trend going on called 'concealed space' in several markets, where property owners are not putting all available space on market, so vacancy/availability rate is worse than what shows up in reports. IE, a building may have 300K sqft space available but only 150K is put on the market or reported. Unclear if that's happening in KC.

https://www.us.jll.com/content/dam/jll- ... 3-2022.pdf

Legally, wonder how they can do this. I could see if it’s not ready to be occupied with dirt floors or is being used for storage etc. but I’d think a property owner couldn’t just determine what’s available and what’s not right?

[beautyfromashes]

There's also a deceptive trend going on called 'concealed space' in several markets, where property owners are not putting all available space on market, so vacancy/availability rate is worse than what shows up in reports. IE, a building may have 300K sqft space available but only 150K is put on the market or reported. Unclear if that's happening in KC.

This happened during the 2008 real estate crash as well. Companies with bad investments started manipulating (lying) about their value. It’s a bandaid that never holds. Hold on to your hats!

[earthling]

Have heard concealed space is a big problem in Chicago but also a trend in other markets. Q3 and Q4 this year said to have some of the highest level of lease renewals in years with many downgrading space so along with concealed space, availability rate probably even worse than reported in some markets.

[earthling]

Did a search and found this about the concealed space issue in Chicago. It describes the issue differently than how I've heard it described by a private equity group wary of the practice, specific to just 'known future vacancies'. Have also heard it practiced with active vacancies as well, which is more broadly deceptive if the case.

Concealed Space - A Concern and an Opportunity
As the Chicago office market continues to witness record breaking office availability, some landlords are delaying the marketing
of known future vacancies. The market’s negative perception of an unprecedented amount of available space in any one single
building worries landlords. This is troubling in a market where 25.1% of tracked office space is available. The potential of
additional availability existing untracked is a cause for concern for landlords but is a golden opportunity for tenants.

https://www.colliers.com/download-artic ... 9c4418d8f4

[earthling]

Office return still struggling even after the post Labor Day push for return, at least in 10 largest markets. Might not see another push until Spring.


Tues and Wed tends to be most common days in office...
https://www.kastle.com/safety-wellness/ ... y-of-week/

[earthling]

Cerner to dump 3M sqft office space on market...
https://www.bizjournals.com/kansascity/ ... fices.html

By CBREs measure, that would bump metro vacancy from about 18% to 22-23% and/or availability rate potentially over 25% - in the territory with the more troubled office markets. That is if all buildings remain as active office space and are not converted to something else.

[TheUrbanRoo]

Big new out of the Downtown Office Summit:

"Vacancy downtown at 9%, regional vacancy rate at 10%. First time ever downtown has lower vacancy than suburban office.

Message= PLACE MATTERS"

https://twitter.com/TomGerend/status/15 ... 24/photo/1

[earthling]

Would be surprising if that low. Colliers is only one reporting down to 10% territory as they track some owner occupied, the others report over 16% metro vacancy and over 20% Class A downtown, even higher *availability* which includes space to be available soon. In this era, availability is the number to watch more closely than vacancy. Availability is over 20% downtown and burbs according to CBRE a few posts back.

With Cerner putting 3M space on market the burbs will show higher vacancy than downtown for a while. But reports are questionable more than ever lately as reporting quality has gone down recently (perhaps due to significant agency turnover) and concealed space (discussed above) could also be an issue even in KC, which skews the numbers to look better than they are.

[atticus23]

Did anyone clock the article in KCBJ saying that downtown could take on 8 MILLION sqft of new office space in the next 20 years? I'm not a subscribing member, so I'm not sure the details of the article. What is everyone's thoughts on this? I think it would be awesome and it would take luring of companies from other regions of the country to do it though or having some of our larger corporate entities to invest dt. IMHO. (admins feel free to move this to a more appropriate thread if need be)

[rxlexi]

Did anyone clock the article in KCBJ saying that downtown could take on 8 MILLION sqft of new office space in the next 20 years? I'm not a subscribing member, so I'm not sure the details of the article. What is everyone's thoughts on this? I think it would be awesome and it would take luring of companies from other regions of the country to do it though or having some of our larger corporate entities to invest dt. IMHO. (admins feel free to move this to a more appropriate thread if need be)

The article was very basic, just a couple of CRE brokers describing what would be the "ideal" amount of jobs downtown relative to the metro (15% of total metro labor force, or 50,000 additional workers and 8M additional sf) to "fully actualize" downtown KC. They follow up with that amount of new office square feet being about 400k sf annually over the next 20 years, or approximately what JoCo has been adding, so it's "possible". No indication of how to get from here to there, companies lined up, projects, etc.

[Cratedigger]

Did anyone clock the article in KCBJ saying that downtown could take on 8 MILLION sqft of new office space in the next 20 years? I'm not a subscribing member, so I'm not sure the details of the article. What is everyone's thoughts on this? I think it would be awesome and it would take luring of companies from other regions of the country to do it though or having some of our larger corporate entities to invest dt. IMHO. (admins feel free to move this to a more appropriate thread if need be)

Yes. And I was at the meeting where it was mentioned. Here's the quote

Speakers Tim Schaffer and Sean Craven, both of AREA Real Estate Advisors, floated a benchmark from a city study commissioned in 2005 — that Downtown ought to support 15% of the metro's labor force to become fully actualized.

Today, Schaffer and Craven said, that percentage sits around 9.9%, with 113,000 workers in 17.7 million office square feet. To realize that 15% goal, Kansas City ought to target attraction of 50,000 new employees and construction of 7.8 million square feet of offices during the next 20 years. That's about 390,000 square feet and 2,500 jobs a year.

Though audacious, Schaffer said he sees those metrics as attainable. In the past decade, Johnson County has averaged about 400,000 square feet of annual new-office construction, with more than 550,000 square feet now underway.

There was a lot of talk about positive impact of the residential conversions of old class B and C buildings KC has done. Since those buildings likely would have remained vacant due to age and the flight to quality.

[Cratedigger]

Did anyone clock the article in KCBJ saying that downtown could take on 8 MILLION sqft of new office space in the next 20 years? I'm not a subscribing member, so I'm not sure the details of the article. What is everyone's thoughts on this? I think it would be awesome and it would take luring of companies from other regions of the country to do it though or having some of our larger corporate entities to invest dt. IMHO. (admins feel free to move this to a more appropriate thread if need be)

The article was very basic, just a couple of CRE brokers describing what would be the "ideal" amount of jobs downtown relative to the metro (15% of total metro labor force, or 50,000 additional workers and 8M additional sf) to "fully actualize" downtown KC. They follow up with that amount of new office square feet being about 400k sf annually over the next 20 years, or approximately what JoCo has been adding, so it's "possible". No indication of how to get from here to there, companies lined up, projects, etc.

Accurate. It would be great if a Burns & Mac or Netsmart or Black & Veatch type company made a statement and moved downtown.

[earthling]

Comes across as a bit of boosterism and the claim of 9% vacancy needs a source with methodology as most reports aren't showing that low. And 20 year forecasting not very realistic much less 5 years with such uncertain times as it is. But there is downtown momentum and a lot of B/C office converting to residential, so at some point it does make sense that new office construction has a chance of picking up over time when uncertain times turn to better times. What's needed is a plausible strategy with realistic targets and seek investors willing to take risks for spec building.

[normalthings]

.

[hartliss]

New tower is in the works. Contractor proposals received in Dec.

Any other details? Seems like big news…

[Chris Stritzel]

New tower is in the works. Contractor proposals received in Dec.

Any other details? Seems like big news…

I personally believe it’s the EPC one on Broadway in the Crossroads. That’s the only one I know of that could be getting closer to an announcement.

[TheUrbanRoo]

New tower is in the works. Contractor proposals received in Dec.

Any other details? Seems like big news…

I personally believe it’s the EPC one on Broadway in the Crossroads. That’s the only one I know of that could be getting closer to an announcement.

What's EPC?

[horizons82]

They're a developer, Alkali.