This year will be among the worst for the U.S. commercial real estate industry, as unemployment leads to a drop of as much as 30 percent in rents in some places and more office towers from Washington to Chicago and Los Angeles sit empty, according to several research reports from large commercial real estate service companies.
“2009 is going to be dismal for commercial real estate,” said John F. Sikaitis, director of research for Jones Lang LaSalle, a real estate services company. “Demand for space is way down. Sales activity is down. Rents are falling dramatically and vacancies are increasing. That’s forcing landlords to compete and lower their rents.”
Nationally, rents are expected to drop 10 to 15 percent. Manhattan rates could drop as much 30 percent. Nationally, the vacancy rate is likely to rise to 18 percent from 15.3 percent, Sikaitis said. Especially hard hit could be places where there’s a lot of office construction, including the Washington region, Miami, Atlanta, Chicago and Houston.
This comes as billions of dollars in loans on office buildings, malls and warehouses are coming due in the next few years and real estate owners are struggling to refinance their deals. That could lead to banks taking back properties and force some owners to sell at a loss.
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