DC Office Vacancies Decline - Analyst Blog

According to a report published by CB Richard Ellis Group Inc. (CBG), the world's largest commercial real estate services firm (on the basis of 2009 revenues), office vacancy rates in Washington DC declined to 9.8% at year-end 2010 from 12.0% at the beginning of the year. The Washington DC market also observed record net absorption of 4.3 million square feet in 2010.

The recent findings by CB Richard Ellis reveal that office building sales soared significantly in 2010, with transaction value up 175% from 2009 to $4.8 billion. The prices for premium assets in the District exceeded $800 per square foot in 2010.

The report further stressed that Washington DC was one of the most attractive global real estate markets and would be supply constrained in 2012 and beyond with investors vying for prized assets.

The development marks a significant about-face from early 2010, when most of the real estate companies were forced to lower rents to attract and keep tenants. In addition, tenants then were asking for and getting more concessions in the form of free rent and capital improvements.

The erstwhile market fundamentals reflected a demand-supply imbalance triggered by the slowdown in demand due to the prolonged economic downturn and an oversupply due to bankruptcies of large companies.

CB Richard Ellis is the global market leader in commercial real estate brokerage and advisory services for property leasing and sales, forecasting, valuations, origination and servicing of commercial mortgage loans, as well as project and real estate investment management.

The company has a broad range of real estate products and services, and an extensive knowledge of domestic and international real estate markets that enables it to operate as a single-source provider of real estate solutions.

CB Richard Ellis offers a range of services to occupiers, owners, lenders and investors in office, retail, industrial, multi-family and other types of commercial real estate assets globally under the CB Richard Ellis brand, and provides development services under the Trammell Crow brand.

We maintain our Neutral rating on CB Richard Ellis, which presently has a Zacks #2 Rank translating to a short-term Buy recommendation and indicates that the stock is expected to outperform the overall U.S. equity market for the next 1−3 months.We also have a Neutral rating and a Zacks #3 Rank (short-term Hold) for Jones Lang Lasalle Inc. (JLL), a competitor of CB Richard Ellis.

 
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