Area Development

Hear what Director of Occupier Research Lauren Picariello has to say about stronger demand in the top tiers of the market and the impact increased competition will have on corporate real estate transaction decisions.

According to the new "Mid-Year 2011 National Office Occupier Outlook Occupier Report" from Jones Lang LaSalle (JLL), the American office market continues to "tighten" in spite of the economy's anemic growth. Its data shows occupiers are focused more on strategies which enhance the real estate productivity and flexibility to meet rapid market changes.

JLL is a financial and professional services firm specializing in real estate. It serves clients in 70 countries from more than 1,000 locations worldwide.

Tod Lickerman, CEO of JLL's Corporate Solutions, noted that increased office space demand--though highly varied across industries, geographies and product types--is placing pressure on corporate occupiers to execute transactions now to "either accommodate growth or seize upon remaining market leverage since the ability to lock in favorable terms may become more difficult. Regardless of where the economic needle moves in the next 6 to 12 months, corporate real estate executives will continue to implement strategies that achieve cost savings, mitigate risk, shed surplus space and increase utilization rates."

Some of the many report highlights include:

Looking ahead, the JLL report forecasted that the sluggish economy will continue to push many occupiers to "scrutinize" the productive use of real estate and enhance the flexibility of their portfolios to meet rapid market changes.

"A step change in leasing conditions is possible if there is a further slowdown in the economic recovery and landlords of top-tier product are forced to pull back on rental rates," stated the report's authors, "but at this time it appears the market stay on its current course of steady--if slightly stunted--growth. Over the second half of the year, demand for office space will likely be slower, but not negative, and remain highly uneven across markets and product types. As the market tightens the ability to lock in favorable terms may become more difficult."