Monday, April 6, 2009

The Debts of the Spenders: US Office Rents Drop the Most in 7 Years

Prepare for a "jobless recovery" as employers continue to scale back hiring and cut back on office expansion.

"You really only fell off the cliff in the fourth quarter 2008," Victor Calanog, Reis director of research, said. "It's really sobering to see that even though we're technically at the beginning of this downturn, the magnitudes of the declines, the fact that they're registering historic levels, is really sobering."

The declines in rent and occupancy along with frozen credit markets could accelerate delinquency rates for U.S. office buildings, Reis said. Not only will borrowers find it difficult to refinance maturing loans, declining fundamentals will erode property values.



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