Urban Centers See Office Listings Climb

June 10, 2011

Owners of big-name office buildings in certain U.S. cities are scrambling to put them on the selling block in order to exploit surging prices before it is too late.

In recent weeks, owners of the Willis Tower in Chicago, the Seagram Building in New York City, and numerous other large structures have put all or portions of their space up for sale, hoping to cash in on the near-boom-era prices being paid by yield-hungry investors discouraged by the volatility of the stock market.

The surge comes as the nation's economy exhibits new signs of weakness, raising concerns among some regarding the direction of office rents and vacancy rates. In April, Real Capital Analytics reported that the value of new sales listings of U.S. office buildings totaled $8.7 billion -- the highest level since 2008.

Preliminary data for last month shows $10 billion in new listings, which would rank as the highest monthly total since the fourth quarter of 2007.

Until recent months, post-recession sales activity in the office sector has been slow as lenders have held onto distressed properties rather than put them up for sale. This, in turn, has frustrated many investors who have been looking to take advantage of others' misfortune. A week ago, Green Street Advisors reported that its index of Midtown Manhattan office-building values had risen 88 percent since its mid-2009 nadir. Researchers note that the index is tilted toward better quality buildings in major cities. Suburban office markets, harder hit by the economic downturn, continue to feel the strain of high vacancy rates.

Source: "Office Owners Seek to Cash In," Wall Street Journal (06/08/11)

© Copyright 2011 Information Inc.

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