TAMPA, FL (Jan. 3, 2011) – Grubb & Ellis Company (NYSE: GBE), a leading real estate services and investment firm, today released its 2011 Real Estate Forecast, which foresees the start of a slow recovery in the leasing market for all property types in the coming year.
Activity in the investment market, which began its recovery earlier than anticipated in 2010, will expand beyond assets at the top and bottom of the quality scale to include properties with slightly more risk.
“All things being considered, 2010 was actually better than most anticipated it would be – we saw positive net absorption and an uptick in investment sales during the second half of the year, positioning us for a continued recovery in 2011,” said Robert Bach (top right photo), senior vice president, chief economist of Grubb & Ellis.
“We have challenges to overcome, and we don’t expect fundamentals to return to their pre-recessionary peaks for several more years, but we’re slowly and cautiously building the foundation necessary to do just that.”
In Central Florida, tenants held leverage in leasing transactions across the board throughout 2010, taking advantage of short term subleases at discounted rates and heavy concessions for longer term deals.
Florida’s lagging employment recovery added to the strong demand for heavily discounted sublease space throughout the year.
Tenants seeking long term deals in early 2011 may be enticed with generous tenant improvement packages.
However, by year-end 2011, Grubb & Ellis forecasts the gap between effective rental rates and asking rates to narrow as absorption and vacancy figures stabilize and landlords become more confident.
“Tenants will remain in the driver’s seat in 2011,” stated Randy Buddemeyer (middle left photo), executive managing director, with Grubb & Ellis in the Southeast, “however, landlords will be less-inclined to allow tenants to lock in long-term at the currently deflated rates.”
“With all of the capital that lenders and investors have been sitting on, they are more likely to consider transactions farther off the ‘fairway’ than we saw last year now that the capital markets are thawing,” said Bach. “Look for investors to broaden their horizon beyond trophies and trainwrecks, which should result in a 75 percent increase in transaction dollar volume from 2010 levels.”
The Central Florida office market showed signs of reaching bottom in 2010, with vacancy in the Orlando metropolitan area reaching the highest percentage in more than 10 years.
Negative net absorption was recorded for the third consecutive year and asking rental rates continued to slide, but at a slower pace than the previous two years. Grubb & Ellis forecasts rental rates will even out in 2011 and increase slightly toward the end of the year.
Tenants should benefit from locking into deeply discounted rates for as long as possible as landlords seek to renew quality tenants in an effort to maintain occupancy levels.
Leasing activity in the industrial sector improved dramatically in Central Florida throughout 2010 with occupancy levels rising slightly and absorption marking a turnaround in the Orlando metropolitan area.
This improvement was aided by a halt in the construction pipeline and sliding rental rates, which are expected to rebound slightly in 2011 while new development remains stagnant.
The current surplus of inventory will deter developers from starting any new speculative development in Central Florida.
Contact:
Rachel Andreozzi, Phone: 561.893.6296,
ALTAMONTE SPRINGS, FL --- Mercantile Capital Corporation, the wholly-owned subsidiary of Old Florida National Bank that specializes in U.S. Small Business Administration (SBA) 504 loans for small business owners who want to acquire or develop their own facilities, reported its best year ever in 2010.
The largest single loan financed the $9.5 million acquisition of a grocery store in San Jose, California, Hurn said. 
