Published January
2001
Developers
cautious about possible slowdown
By
Kimberly Hilden
Herald Business Journal Assistant Editor
SEATTLE — National
and regional leaders of the commercial real estate industry, visiting
here in mid-December to share their views on the market, all agreed that
cautious optimism would be the rule in 2001, while technology’s impact
on the industry would continue to grow. “
The picture today
is … a little bit muddy,” Thomas Carr, the Chairman, President and Chief
Executive Officer of CarrAmerica, said during the “Commercial Real Estate
Insights” meeting.
“The current vacancy
rate pictured is spectacular (nationally and regionally). … At the same
time, we do see a very uncertain economic environment” fueled by recent
volatility on the stock market, economic indicators that point to slowing
and the dot-com shakeout of the past months, Carr said.
“We think there
are a lot of exciting opportunities out there because of all the changes
(in the industry), but we also have to be fairly cautious,” said Carr,
whose company owns, develops and operates office properties in 14 markets
nationwide, including Seattle.
In the Puget Sound
region, an economic slowdown could make financing tough to get for developers
of downtown Seattle projects, said Greg Smith, President of Martin Smith
Development Corp., a Puget Sound-based company that was involved with
the Millennium Tower project.
“Projects that somebody
was considering developing that were marginal are not going to be financed,”
Smith said. “Even big projects are going to be harder to finance.”
“It’s a very difficult
time, but I do think it will get better,” he said, adding that “despite
the dot-com hype that’s happened, we’re going to continue to see rents
rise” in downtown Seattle.
While possible slowing
could result in muted space demand and fewer projects, technology continues
to add opportunity and challenges to the commercial real estate industry,
Carr said.
“Technology is having
numerous impacts, the most obvious is on demand,” he said. “In terms of
technical requirements for buildings, it is clear that the demands that
tenants are requiring of buildings are going up each year in areas of
power, HVAC, parking, flexibility, conductivity.”
As for opportunity,
Carr said, just look at HQ Global Workplaces Inc., which his company is
involved with.
HQ provides “just
in time office space” for executives on the go, who rely on the mobility
and portability technology offers, he said.
“It’s full service
(with) flexible contracts,” Carr said. “People have really been taking
to this product. Demand has exploded.”
Technology also is
encouraging teamwork in the real estate industry, said Philip Cyburt,
President of the Boeing Realty Corp., a wholly owned subsidiary of the
Boeing Co.
“The more technology
is integrated into the industry, the more you’re going to need to have
leverage of your time and efforts throughout the industry,” said Cyburt,
whose company is responsible for $9 billion of real estate assets in the
Boeing portfolio.
Recently, Cyburt
said, the Boeing Realty Corp. has been focused on reducing assets and
looking at duration-matching strategies in which the company could lease
back real estate for a period of time that matches production cycles.
The annual “Insights”
event was coordinated by the Commercial Brokers Association and sponsored
in part by The Seattle Times, Washington Mutual, Kirtley-Cole Associates
Inc., Stewart Title Guaranty Co. and Short Cressman Burgess PLLC.
Speakers included
Carr, Smith, Cyburt, Carl Panattoni of Panattoni Development Co. and Craig
Vought of Spieker Properties.
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