At first glance, the Democrats and Republicans chose two cities for their conventions with a fair amount in common. Charlotte, N.C., and Tampa, Fla., are both southeastern cities with mid-sized office markets with about 40 million square feet of inventory. Both were viewed during the boom by employers and some investors as promising low-cost alternatives to office space in larger cities such as New York and Washington, D.C. Today, both regions’ office markets are still in recovery mode.
But the comparison pretty much ends there.
Charlotte is well ahead in the matchup when it comes to office vacancies, rents and investment sales volumes, analysts say. “Based purely on the amount of money flowing into the office market, Charlotte is far and away in the best shape,” says Ben Carlos Thypin, director of market analysis with real-estate research firm Real Capital Analytics.
For the 12 months ending in the second quarter the value of Charlotte office transactions completed totaled $870 million, according to Real Capital. That’s still below the $1.6 billion hit during 2007, but it’s roughly four times the amount in the year-earlier period. Tampa logged office sales volume of $329 million for the 12 months ending in the second quarter, up 46% from the year-earlier period but below the $1.3 billion high hit in the same period of 2007.
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Given its reliance on the sector, Charlotte’s office market seems to have weathered the banking crisis better than some expected. “A lot of people thought Charlotte would fall off the radar given its banking presence,” says Ryan Clutter, an investment broker with CBRE Group Inc CBG +0.64%. in Charlotte.
In Tampa, concerns about the impact of the housing crisis still overshadow many investors’ views of the office market, Mr. Thypin said. Indeed, Tampa’s housing market has been harder hit than Charlotte and by a number of measures has also been slower to recover, according to a report by Jed Kolko, chief economist at real estate website Trulia. Tampa’s housing prices fell 42% peak to trough compared with a 16% drop in Charlotte. And Tampa today has half the construction activity that Charlotte does, nearly double the vacancies and more than twice the foreclosures, the report said.
And yet, commercial real-estate brokers in Tampa say there’s room for optimism. Years ago Tampa was more of an industrial and port-related real estate market. In recent decades its office market has matured into a region that’s home to such employers as Outback Steakhouse and TECO Energy Inc. Katie Trott, a broker in Tampa with CNL Commercial Real Estate, says housing-related companies such as appraisers and mortgage firms have begun to lease space again as the housing market is getting back on its feet. StreetLinks, an appraisal management firm, has opened a new 77,000-square-foot facility in Tampa.
So do the office markets, whether healthy or not, provide any hints as to the outcome of November’s election? Most analysts are skeptical but Ryan Severino, a senior economist at Reis Inc. didn’t rule it out. “The economist in me says it shouldn’t have any kind of predictive power but the part of me that knows that the universe can be random and mysterious wonders if there’s something to it,” Mr. Severino said.
By Maura Webber Sadovi
Taken from: http://blogs.wsj.com/developments/2012/09/03/stacking-up-convention-cities-as-office-markets/
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