CBD vs SUBURBAN
  • Primary markets remain most desirable; secondary markets also offer up profitable opportunities.
  • Office sales volume is increasing in secondary markets, while primary markets like Washington, D.C., and Boston have stable sales volumes.
  • Real estate trade activity still supported by favorable lending environment. Looking ahead to the fourth quarter of 2015, we are starting to see once again some near-term upward movement in Treasury yields, given stronger economic growth prospects and the impact this has on fears of higher interest rates. Nonetheless, Treasury yields and interest rates are expected to remain low from a historical perspective even into 2016, and during any periods of volatility we can expect balance sheet providers to become more competitive in their lending.
  • Buyer profiles increasingly concentrated with foreign institutional buyers in primary markets.
  • All in all, the overall cost of capital remains favorable and we can expect the lending environment to remain healthy to support real estate investment activity.
  • Sources:CoStar Group, Inc., PPR

Net Office Absorption CBD vs Suburban
  • Absorption is the highest for a first quarter during the recovery so far; variety of markets see high figures.
  • Office demand in 2013 was up by more than 20% from 2012 and is forecasted to increase to over 70 million SF in the 2014 to 2017 period.
  • Demand growth has been most pronounced in the suburban office market, which had 90% of office net absorption in 2013, well over.
  • Source:CoStar Portfolio Strategy