The first nasty wave of the commercial real estate tsunami just hit in Boston, MA, USA and hit hard!
The Boston Business Journal reported in this weeks edition( print edition only I must add) that Boston's "Big landlords chop rents in hustle for tenants."
Mega commercial brokerage firms Jones LaSalle Lang reported that according to its 2nd quarter Class A Office Space (the most expensive)dropped 24.6% in the past 12 months.
And lower rents mean lower property values! To add to the woes the office vacancy rate has climbed to 16.6%. Yes, we are indeed still in the recession.
The Blackstone Group which purchased 13 million square feet for $39 Billion in 2007 is the largest commercial property owner in the Greater Boston Market.
The BBJ notes that the private equity firm's ( Blackstone Group) plan was to flip the property in a few years. And surprise: The market flopped!
Now for the first time in years, if not decades ,we are seeing the beginning of a lease price war! And the winners will be: The Tenants!And every major property owner and investor of office space in Boston, and in the suburban markets, are in the same leaking boat.
Rising vacancies, rising property expenses and a major lack of viable tenants seeking space. Rent cuts and lease concessions will be the name of the tune for some time to come.
Well I think I have an idea for the next blog: Can't do any good flipping in a flopped market!
Bill McInerney
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