Well,
I started to predict this a couple of years ago, but most "experts"
were not listening. The erosion of office space vacancy is now
also effecting downtown retail space as well.
The
total Tsunami has not hit yet. More companies will continue to shrink
their demands for office space as more use a permanent "work-from-home"
workforce. The vacated buildings will compete for whatever
tenants are left and it will become the "reverse" of Musical
Chairs. Instead of space being taken away from the market, more
space will go online to be rented and the pool of companies wanted
spaces will shrink as well as what they need for a corporate
footprint. Some companies have already started as I have pointed
out.
One
example, a large international bank scaled down their real estate
leasing by 20% in 2021 and now is looking at shrinking it down more in
2022 by 40% . End result, in a matter of two years they will have
cut down their leased space by over 50%.
This
is a huge iconic retail building to fall from the Tsunami of vacancies
coming across Chicago and it should be a huge warning sign by now.
(Other cities are also seeing a marked increase in vacancy rates,)
Water Tower Place continues
to bleed tenants and now is being given back to the Bank. Looks like my
crystal ball was a little clearer than most of the "Real Estate
Experts".
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| Brookfield Property Partners plans to relinquish Chicago’s Water Tower P...The owner of Water Tower Place, a mall on Chicago’s Magnificent Mile, will turn the property over to its lender ... |
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NOT getting back to "Business as usual" was pointed out a couple of years ago in my article as well as others following it.
APRIL 2020 --
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| After COVID-19: Permanent Changes and Evolution of Smart CitiesCOVID-19 will redefine the workplace and the concepts dealing with smart cities as well as government services. |
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NOVEMBER 2020
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| Post-COVID New Normal: Paradigm Shift in Work EnvironmentBusiness is changing fast due to the pandemic. Many of these changes will be permanent. Are cities and municipal... |
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It's
not over yet. Downtown areas will continue to implode if nothing is
done about the paradigm shift in real estate as well as the increasing
crime rates.
As I said in my latest article:
Seeing
the approaching tsunami of vacant office space may provide some lead
time to make some strategic changes and redirect resources. Realizing
it after it hits will just verify that all the tools and experts were
just all wet in their analysis.
You can’t
apply 20th-century tools and solutions to solve 21st-century
challenges. Sometimes you have to take your nose out of the charts and
actually take a look at the churning seas around you.
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| Commercial Real Estate is Facing a TsunamiThe pandemic has severely impacted commercial real estate. |
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