Latest news with #vacancyRates
Bloomberg
30-06-2025
- Business
- Bloomberg
Struggling Downtowns Are Looking to Lure New Crowds
The 12-story building at 300 West Adams Street is typical of the terra-cotta-clad office towers that rose in downtown Chicago during the 1920s. Heavily ornamented with Gothic Revival details and brass decorative elements, it's across the street from the city's tallest skyscraper, the freshly renovated Willis (née Sears) Tower, and a few blocks from the elevated train tracks that define the city's central business district, known as the Loop. It sold for $51 million in 2012. But when it went up for auction at the end of 2023, the historically landmarked building, half-vacant, sold for a mere $4 million, a 89% drop. The plummeting value of 300 West Adams is just one example of the deep discounts in Chicago's office real estate market, where a quarter of the business district sat vacant in the first quarter of 2025. The pandemic-fueled explosion of remote work blasted enduring holes in the hearts of cities across the US: Nationwide, downtown vacancy rates sat at 19% in April. A third of central Portland's office space remains unoccupied; the Oregon city's second-tallest skyscraper, the 42-story former US Bancorp Tower, is more than half empty and on sale for $70 million, a precipitous drop from the $373 million earned the last time it changed hands.
Yahoo
19-06-2025
- Business
- Yahoo
Trophy offices in Canada's big cities are outperforming the rest. That's not normal
Demand for premium office space in Canada's biggest cities has been extraordinarily resilient, a new report from Colliers Canada says, dramatically outpacing the performance of lower-tier buildings as paradigm shifts continue to reshape work culture. This year, vacancy rates for A-, B- and C-class office buildings are around 16 per cent, while trophy-, or AAA-, class buildings had a vacancy rate of around seven per cent — the widest gap in at least a decade and a striking shift from pre-pandemic norms, when cheaper buildings were typically more in demand. 'If you look historically, that's not usually what happens,' said Adam Jacobs, Colliers Canada's head of research, in an interview with Yahoo Finance Canada. 'But there is kind of a new reality of work that we're all trying to figure out. You know, the return to the office.' The Colliers report says that 'demand is increasingly consolidating around top-tier, best-in-class spaces, with tenants prioritizing quality, location, and amenities over cost alone.' Colliers data show lower-tier buildings having generally lower vacancy rates than trophy-class from 2015 to 2020, which Jacobs says is the norm. The gap peaked in 2017 with trophy-class vacancy rates 3.3 percentage points higher than for lower-tier. The vacancy rates for trophy and lower classes drew even in 2019. Through the pandemic, vacancy rates rose for all building types — but the rise was steeper for lower tier. Around 2023, vacancies in AAA-class buildings levelled off and began to decline, while lower-tier vacancies continued higher. The lower-tier vacancy rate is now 8.9 percentage points higher than for AAA. There is a feeling among certain tenants especially, 'We've got to give the employees a reason to be here.'Adam Jacobs, Colliers Canada Colliers notes similar widening spreads for availability (similar to vacancy but also including currently occupied units that can be leased) and absorption (the amount of space being newly occupied or newly vacant). 'The gap between AAA and the rest of downtown [office space] is just becoming larger and larger and larger to the point where I'm not sure how much larger it can get,' Jacobs said. Most of the recent premium buildings in Toronto, Montreal and Vancouver had big-name tenants before construction started — Jacobs pointed to a 'big boom' in tech companies looking for 'the top-drawer stuff.' Since then, the Colliers report notes, trophy-class demand has been 'further supported by renewals, lease extensions, and general interest in top-tier premises where large pockets of vacant space had been unlocked.' One of the drivers of this interest, Jacobs says, is the pressure the era of working from home has put on employers now trying to bring employees back to the office full or part-time. 'There is a feeling among certain tenants especially, 'We've got to give the employees a reason to be here,'' Jacobs said. ''We have great amenities. We have great coffee, we have great food, we have a great view, we have a prayer room, we have a green building. We have everything, you know, tick every box.'' Location is also a factor, with proximity to transit corridors essential for people less willing to deal with arduous commutes and parking. 'It's harder and harder and harder to get downtown than it used to be,' Jacobs said. 'And that sort of weirdly benefited these really premium buildings, because it's like, just get on the suburban train, show up at the main rail station and you're a one-minute walk from your building. Because [AAA class] have the best locations.' Regardless, the current reality is highly unusual, Jacobs says. "AAA office is a luxury product. Like, it's expensive, and I would say most tenants can't afford AAA office. So generally it has a bit higher vacancy." Colliers says the vacancy rate gap is 'expected to peak as premium supply tightens, driving renewed interest in broader downtown inventory,' as more firms look to bring workers back to their offices. Jacobs says several factors — the 'boom or bust' development cycle, a tough lending environment for major real estate developments, the major pension funds largely investing outside of commercial real estate — mean there won't be any new premium office spaces in the next five years. That alone means some organizations will eventually seek out options in the next tier. 'This has already been a very prolonged increase in vacancy,' Jacobs said. "It's usually like, vacancy goes up for maybe two, two-and-a-half years, and it levels off, and then it starts coming back down. It's been going up for five-and-a-half years, and we are still waiting for it to peak.' John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf. Download the Yahoo Finance app, available for Apple and Android. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Zawya
13-06-2025
- Business
- Zawya
Return-to-office mandates fuel hopes of London property market revival
LONDON: Demand for premium office space in cities like London and Paris is heating up as more companies order staff back to the office, but investment is lagging and could worsen a supply crunch, property sources said. Many businesses are rolling out stricter return-to-office mandates, including JPMorgan, Amazon and Royal Bank of Canada. Others like UBS and Deutsche Bank have told staff not to work both Fridays and Mondays from home. The trend is reflected in falling vacancy rates and record office rents in prime locations such as central London. Yet investors remain reluctant to buy properties or commit to building new ones due to uncertain pricing and high borrowing costs. "The pendulum has swung... We've got pent up demand, and then we've got a shorter level of supply, particularly quality supply," said Lee Elliott at property agency Knight Frank. The office vacancy rate in central London fell to 7.1% in March, according to agency Savills, down from a post-pandemic peak of 8.7% and the lowest since 2020, but higher than the roughly 5% level in pre-pandemic 2019. Average prime rents in the central City and West End districts were at near-record levels in March, Savills data shows. However, the picture is less rosy outside the centre. The vacancy rate across London as a whole rose to 10.9% in the first quarter, according to CoStar data, the highest in more than 20 years, as occupiers shunned older, out-of-town properties. The mixed picture is weighing on investment. Office sales in Europe last year slumped to their lowest level since 2009, while transactions fell 18% year-on-year in the first quarter, according to MSCI data. In London, only about 4 million square feet of new office space is planned to complete in 2027 and 2028 - less than was delivered in 2025 alone, according to Deloitte. Planned London office sales by Brookfield and Nuveen were shelved this year after bids fell short of expectations, although there are signs of improved appetite for some trophy assets - Blackstone is among bidders for a Paris office block with a price tag of 700 million euros ($812 million). Some companies are also cooling on the downsizing trend, with just 21% of occupiers looking to cut space in a recent Knight Frank survey - the lowest level in seven years. HSBC is moving its headquarters in London to a building roughly half the size, but has realised it will lack sufficient space and is assessing other options including retaining smaller offices elsewhere in London, a source familiar said. An HSBC spokesperson declined to comment on its options. With limited new supply, improving demand could ultimately benefit second-hand office space. Around 30 large companies are each looking to lease more than 100,000 square feet of office space in London - equivalent in total to at least 40 soccer pitches - according to Kevin Darvishi, leasing director at office developer Stanhope. "Frankly there will not be enough even half those occupiers to move," he said.
Reuters
13-06-2025
- Business
- Reuters
Return-to-office mandates fuel hopes of London property market revival
LONDON, June 13 (Reuters) - Demand for premium office space in cities like London and Paris is heating up as more companies order staff back to the office, but investment is lagging and could worsen a supply crunch, property sources said. Many businesses are rolling out stricter return-to-office mandates, including JPMorgan, Amazon and Royal Bank of Canada. Others like UBS and Deutsche Bank have told staff not to work both Fridays and Mondays from home. The trend is reflected in falling vacancy rates and record office rents in prime locations such as central London. Yet investors remain reluctant to buy properties or commit to building new ones due to uncertain pricing and high borrowing costs. "The pendulum has swung... We've got pent up demand, and then we've got a shorter level of supply, particularly quality supply," said Lee Elliott at property agency Knight Frank. The office vacancy rate in central London fell to 7.1% in March, according to agency Savills, down from a post-pandemic peak of 8.7% and the lowest since 2020, but higher than the roughly 5% level in pre-pandemic 2019. Average prime rents in the central City and West End districts were at near-record levels in March, Savills data shows. However, the picture is less rosy outside the centre. The vacancy rate across London as a whole rose to 10.9% in the first quarter, according to CoStar data, the highest in more than 20 years, as occupiers shunned older, out-of-town properties. The mixed picture is weighing on investment. Office sales in Europe last year slumped to their lowest level since 2009, while transactions fell 18% year-on-year in the first quarter, according to MSCI data. In London, only about 4 million square feet of new office space is planned to complete in 2027 and 2028 - less than was delivered in 2025 alone, according to Deloitte. Planned London office sales by Brookfield ( opens new tab and Nuveen were shelved this year after bids fell short of expectations, although there are signs of improved appetite for some trophy assets - Blackstone (BX.N), opens new tab is among bidders for a Paris office block with a price tag of 700 million euros ($812 million). Some companies are also cooling on the downsizing trend, with just 21% of occupiers looking to cut space in a recent Knight Frank survey - the lowest level in seven years. HSBC is moving its headquarters in London to a building roughly half the size, but has realised it will lack sufficient space and is assessing other options including retaining smaller offices elsewhere in London, a source familiar said. An HSBC spokesperson declined to comment on its options. With limited new supply, improving demand could ultimately benefit second-hand office space. Around 30 large companies are each looking to lease more than 100,000 square feet of office space in London - equivalent in total to at least 40 soccer pitches - according to Kevin Darvishi, leasing director at office developer Stanhope. "Frankly there will not be enough even half those occupiers to move," he said. ($1 = 0.8624 euros)
Yahoo
26-05-2025
- Business
- Yahoo
Empty shops prompt 'ghost town' fears
The number of empty shops in County Durham is at its highest rate ever, a report has found. Peterlee, Bishop Auckland, and Newton Aycliffe are the worst hit, while Ferryhill, Shildon, Consett, and Barnard Castle have also suffered heavily in the past year. Overall, vacancy rates recently increased to 18.3%, compared with the national average of 14.4%. However, one local retail consultant said work was being done to tackle the issue, adding "despite all the challenges, we continue to see good-quality independent and national businesses opening and seeking space in the region's town and city centres". High streets across County Durham have continued to suffer when high-profile retailers leave prominent sites, with closures fuelled by changing shopping habits and rising rent. The number of pharmacies, banks, and supermarkets have also decreased, but there were about 33% more takeaway outlets in 2024 compared with 2014. The Local Democracy Reporting Service said the report, Ghost Towns: The Decline of the High Street and Health Inequalities, argued for more "people-friendly" spaces, with seating, public toilets and pedestrianised areas to increase footfall. Graham Soult, a North East-based retail consultant, warned that the declining state of local high streets should not be sensationalised. "Local place leaders on the ground, in this region and beyond, are already working hard to tackle those issues and help facilitate the very change that the report's authors advocate", he said. Residents in Bishop Auckland and Spennymoor have been invited to take part in decision-making and new powers such as High Street Rental Auctions, to help redevelop derelict properties, are set to be introduced in Darlington. Mr Soult, who previously worked on the government's High Streets Task Force, said: "It is particularly disappointing that the report does not provide a platform to celebrate case studies of the good practice it is pushing for. "The question we need to be asking is how we can all work together to make even more of that good stuff happen." Follow BBC North East on X, Facebook, Nextdoor and Instagram. Can pop-up shops help to regenerate our High Streets? Council buys shopping centre for town regeneration Durham County Council
