Wednesday, December 03, 2008

A General Malaise

“You can’t shit a deal”

That’s what a prominent local developer quipped to me during the last recession. This week The National Bureau of Economic Research formally declared that the recession began last December. This was no news to the local commercial real estate community. Developers have seen the volume of deals steadily decline since at least then. For most, this was the slowest summer for leasing in recent memory.

For the past year brokers have been trying to fill vacant space in new buildings while several tenants vacated or downsized in older buildings. Building owners are offering a variety of incentives to both prospective tenants and their brokers in an attempt to fill the empty spaces. Much of that effort is to no avail.

From my experience, companies are hunkering down. Even those who really need to expand are opting to stay in place and make do with what they have as they wait to see happens to the overall economy regardless of what is happening locally.

And locally we are in better shape than most of the country.

The Baltimore Washington corridor is still poised for strong growth with an influx of more than 20,000 new jobs coming to Fort Meade over the next three years. The only problem is that those jobs won’t really start filtering in here until the fourth quarter of 2009. That doesn’t help a building owner looking for rent paying tenants today.

All across the region, building owners and their listing agents are sitting down trying to figure how to position their empty space against the other guys’ empty space. The few prospects actually looking for space are being heavily courted and the profit margins are paper thin. Most don’t expect things to pick up much for at least a year.

That’s not exactly a cheerful note to end the year on.


Anonymous said...

Your assessment is right on target. Businesses are cutting back on employees, advertising, employee benefits, and anything else they can to survive in a recession. It seems to be the conventional wisdom. My own attitude is spend more money, hire more people, and spend more advertising dollars. Be a contrarian and you might be pleasantly surprised at your success. Advertising or marketing is particularly important. That's why I want to mention I have 2000 sq ft of office space near 175 and 95 to lease to the right tenant. It's location, location, location.

wordbones said...

Happy hunting!

Jason said...

Yes this recession is different. First you see people shouting in glee that yes we are in a recession. Then consider the political infighting that we see daily. This infighting causes all parties to give money to whomever in hopes of getting votes during the next election cycle.

Our leaders are not putting our nation’s best interest first. They are selfish imbeciles that need to grow up a play with each other’s toys.

Yes it is true that we see a recession about every three years, and when we do they usually last about 8.5 months. This time politics will bring to the table spending and their denial of the situation won’t get us out of this mess.

Anonymous said...

I'm surprised at your cynicism for such a young man. Are you expecting politicians to do anything contrary to their own best interests? Do you expect the problems we have today caused by years of neglect or the normal economic cycle to be solved in a day or month? We've seen recessions before. Our great grandparents even survived the depression of the 1930's. Keep the faith. We can survive.

JessieX said...

Jason, I'd love to see your voice added to It's an aggregate site for local bloggers. Just hop over to the site, submit your blog and join the growing conversation about things hyper-local and things mega-global. ;-)