South Korean electronics giant Samsung Electronics Co. is eyeing a large expansion, looking for up to 1 million square feet of Manhattan office space in a new or existing tower. It would be one of the largest corporate expansions in New York City in years, even rivaling Conde Nast's new headquarters that opened in One World Trade Center on Monday, according to the Washington Street Journal. Offices of that size generally hold between 5,000 and 7,000 employees. Samsung'a current US headquarters is in Ridgefield Park, New Jersey and has offices in Silicon Valley, among other locations in the U.S.
Office space under construction in Houston has increased by about 54 percent over the last 12 months. According to the Houston Business Journal, more than half of that space is leased or committed, with large tenants that are moving or expanding taking the bulk of the space. It’s the highest level the area has seen since the boom of the 1980s. There is currently 19 million square feet of office space under construction in the Houston area. About 36 percent of that is corporate-owned office space, and includes Exxon Mobil’s 3 million-square-foot campus in north Houston, Phillips 66’s 1.1 million-square-foot campus in Westchase and Southwestern Energy’s 515,0000 square-foot office building in Springwood Village, according to PM Realty. About 5.4 million square feet of new space is expected to deliver by the end of the year, which will bring the yearly delivery total to 10.8 million square feet — far exceeding last year’s delivery total of 3.2 million square feet. In response to the construction boom, Houston added more construction jobs to its market than any other major metro in the country from August 2013 to August 2014, according to a survey conducted by The Associated General Contractors of America.
Office space demand across the country over the third quarter remained constant while absorption of available space continued to gain momentum. According to the CoStar Group's Third-Quarter 2012 Office Review & Outlook, the overall U.S. office vacancy rate edged down and net absorption rose to 15 million square feet during the quarter from 13 million square feet at mid-year 2012. Little new supply and construction helped balance the supply and demand.
An uncertain short-term economic outlook has caused leasing activity to slow and vacancies to rise in the Washington, DC office market. According to the Washington Business Journal, although the area remains one of the healthiest office markets in the country, net leasing absorption was a negative 2.5 million square feet through the first nine months of 2012, compared to a positive 1.1 million square feet during all of 2011.
The national office sector is projected to experience a slowed growth in 2012 due to a damper on demand for new space. However, according to the National Real Estate Investor, select office markets that are home to technology firms and energy companies will continue with steady growth in the foreseeable future. The average office vacancy at the end of 2011 will stand at 16.8%, and is only expected to decrease down to 15.7% over the course of 2012. In addition, average rents of all classes of office properties will continue to stagnate.
While results won't be dramatic, an improving employment picture and a more positive outlook by private-sector employers will boost the North Texas commercial real estate market in 2011. According to the Dallas Business Journal, office leasing will increase next year due to the fact that many tenants' leases are rolling. On top of that, many relocating corporations will choose Dallas-Fort Worth for their headquarters at an increased pace.
While office vacancies are widely reported, few factor in shadow supply, downsized companies with more leased space than they need, holding on to it hoping things will get better, or stuck in long-term leases with more space than is wanted or needed. In Mike Shedlock's blog "Mish's Global Economic Trend Analysis" he reports on how space that is leased or owned but largely empty and not officially listed anywhere as vacant will likely prolong the recovery of areas already struggling with high vacancy rates.
According to the St. Louis Business Journal, the Missouri Development Finance Board gave the final approval of close to $2.6 million in tax credits toward Scottrade's $36.3 million expansion in the St. Louis suburb of Town and Country. Last September, Missouri officials gave preliminary approval to help Scottrade construct a 138,000-square-foot, 700-spot parking garage.
According to The New York Times in their article, “Further Slide Seen in Commercial Real Estate” there are 180 major buildings totaling $12.5 billion in value that are facing foreclosure or bankruptcy in Manhattan alone. Rents for commercial office space in the area fell faster over the past two years than in any such period in the last half century.