March Madness

I bet the folks at the Power and Light District and those running the Sprint Center are thrilled with Oklahoma playing in the KC bracket as opposed to Kansas and Missouri:) That’s not good recession planning by the committee.

In recent weeks, there have been numerous articles about the dim prospects for commercial real estate over the next few years. Is is an overreaction to the cliff residential real estate and the stock market have fallen from? Or is it likely a realistic outlook of the state of the industry?

Supply and demand is the driving factor behind all investments, whether securities or real estate. In commercial real estate, the balance or imbalance of supply or demand is often seen through absorption and deliveries of commercial real estate space.

Are you using CoStar to track absorption? Through analytics, we can identify the vacancy in a market through absorption and deliveries. When looking at Kansas City specifically, in all industry types, you will note that future deliveries are running at historic lows. Most of the developments never went past the “proposed” stage, leading me to believe that the raw land portion of CRE is the most sensitive to serious damage.

The “x” factor seems to be absorption and how much space is lost as a result of closed business/layoffs.

When in analytics you have the ability to forecast a market based on your own research and expectations. CoStar tracks the deliveries of CRE, but you have the ability to look into the CRE future 2 years by making absorption assumptions. In turn, this will allow you to understand where vacancy and rental rates will likely be as you continue to establish your business model through this recession.

Please let me know a good time to meet with you and go over these areas of CoStar.

Thanks as always!