Todd Burnette Forecast 2010
Transcript of Todd Burnette Forecast 2010
-
8/14/2019 Todd Burnette Forecast 2010
1/25
1
Fort Worth office market
January 13, 2010
Todd Burnette
-
8/14/2019 Todd Burnette Forecast 2010
2/25
2
Fort Worth Office Market
2009 Market Recap
Market Conditions - Choice, Competition and Economics
2010 Outlook and Advice
-
8/14/2019 Todd Burnette Forecast 2010
3/25
3
19.5% Vacancy
-
8/14/2019 Todd Burnette Forecast 2010
4/25
-
8/14/2019 Todd Burnette Forecast 2010
5/25
5
Fort Worth Market Recap
CBD vacancy up over 17%
200,000 SF + shadow space downtown
Concessions up
Effective rents down 20% (in most buildings) vs. Peak Tenants wanted deals
-
8/14/2019 Todd Burnette Forecast 2010
6/25
6
Market Deals
Oncore 201,354 SF
Lockheed 61,945 SF
eRx 19,317 SF
Dunaway & Associates 30,304 SF Weaver LLP 36,000 SF
Goff Capital/Barclays 17,000,000 SF Crescent Portfolio
Jackson Walker 18,014 SF
McDonald Sanders 19,765 SF
Corinthian College 40,794 SF
-
8/14/2019 Todd Burnette Forecast 2010
7/25
-
8/14/2019 Todd Burnette Forecast 2010
8/25
8
Reduction in operating costs
Reduction in capital investments
Reduction in spending on philanthropic activities
Hiring of talent that would not have been available otherwise
Close offices
Top steps taken by Tenants in response to economy
-
8/14/2019 Todd Burnette Forecast 2010
9/25
9
Choice, competition, and economics
Choice: Increased number of options.
Competition: On the tenant demand side, competition is minimal.
Economics: Rent reductions can be found in most buildings.
-
8/14/2019 Todd Burnette Forecast 2010
10/25
10
Choice: Class A vacancy levels continue to climb
2009 Class A vacancy rate 2008 Class A vacancy rate
0%
5%
10%
15%
20%
25%
30%
Washington, DC Chicago Fort Worth Houston
Fort Worthvacancy up
174%
-
8/14/2019 Todd Burnette Forecast 2010
11/25
11
Choice: Sublease options grow
New York Chicago Atlanta Fort Worth
Fort Worth subleasespace up 275%
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
-
8/14/2019 Todd Burnette Forecast 2010
12/25
-
8/14/2019 Todd Burnette Forecast 2010
13/25
13
Rent: Effective rents down 20%
-50.0%
-45.0%
-40.0%
-35.0%
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
NYC Washington, DC Fort Worth Chicago
-
8/14/2019 Todd Burnette Forecast 2010
14/25
14
Combination of lender tightening
and spread between ask/bidcrippling transaction activity
Investment Sales:
-
8/14/2019 Todd Burnette Forecast 2010
15/25
-
8/14/2019 Todd Burnette Forecast 2010
16/25
16
Notable Investment Sale
Carter Burgess Plaza Goff Capital & Barclays Capital
954,000 SF
96% Leased
Stabile Ownership
Aggressively Doing Deals
- Jackson Walker
- McDonald Sanders- Petroleum Club
-
8/14/2019 Todd Burnette Forecast 2010
17/25
1717
Market Outlook - 2010
-
8/14/2019 Todd Burnette Forecast 2010
18/25
18
Economic recovery - positive signs but too early tocelebrate
The good news- Financial crisis averted
- Equity markets will improve- Pace of job losses will slow
And the risks- Foreclosures push values down further
- Credit Crunch lingers
- Consolidations/Acquisitions could add more space to the market
-
8/14/2019 Todd Burnette Forecast 2010
19/25
19
Investor and lender mindset heading into 2010
Lenders will continue to deleverage balance sheets Opting to extend and pretend
Widespread distress only beginning to develop, more is inevitable Equity from 2005-2007 purchases is gone
Sellers better off holding than selling at distressed prices
Transaction activity likely to remain flat Trades likely to be distressed or super core assets Banks holding properties taken back rather than selling distressed
-
8/14/2019 Todd Burnette Forecast 2010
20/25
20
Tenant mindset for 2010
Focus on cost savings Align space with new demand levels Restructure leases
Focus on the employee Reduce costs and improve productivity
Elevate employee performance and job satisfaction
-
8/14/2019 Todd Burnette Forecast 2010
21/25
21
Advice for 2010
Tenants- Tremendous opportunities for Tenants
- Enhance non-economic lease provisions
- Upgrade space and location
-
8/14/2019 Todd Burnette Forecast 2010
22/25
22
Advice for 2010
Landlords- Work renewals hard and early
- Make every deal at the best rate you can
-
8/14/2019 Todd Burnette Forecast 2010
23/25
23
2010 Outlook
Office fundamentals likely to lag 12-18 months behind recovery in theeconomy
Further job losses are expected
Speculative office construction will be on hold for the foreseeablefuture
Landlords will compete aggressively for tenants
Concessions will remain high
Sublease opportunities will continue to exist
-
8/14/2019 Todd Burnette Forecast 2010
24/25
24
2010 Outlook
Most Fort Worth Landlords will remain stable CBD Class A rates will average $23 + E
Suburban Class B rates will average $17 Full Service
Effective rents should level out in 2010
Vacancy rate will peak in late 2010
-
8/14/2019 Todd Burnette Forecast 2010
25/25
25
www.us.joneslanglasalle.com
19.5% Vacancy
Tarrant County will hit