Office space growth may buck CRE slowdown predictions

Many financial experts have predicted in recent months that growth in the commercial real estate sector, which has been robust for several years, would begin to slow down in 2016, but the CEO of the nation's largest real estate brokerage company feels that office properties could still be lucrative for developers and investors in Illinois and around the country.

While all other types of commercial real estate have recovered fully the price losses they suffered in the wake of the 2008 financial crisis, the prices of office space have yet to surpass their pre-recession levels. The CEO believes that this is because it has taken the economy several years to create the jobs needed to fill the excess office space created by the crisis. This excess capacity prompted commercial real estate developers to move away from office buildings and toward retail, manufacturing and warehouse projects.

However, consistent job growth and a shortage of new office construction has led to shortages of available office space in many parts of the country, and economists predict that an additional 600,000 white collar jobs will be added in 2016. These factors could cause demand to rise and rents to soar even as companies work to reduce the amount of office space they provide to each of their workers. Demand is expected to be especially high from small and medium sized businesses that traditionally do not have large amounts of spare office capacity to grow into.

Renting office space is only a profitable business when commercial tenants abide by the the terms of their leases and pay their rents in a timely manner. Experienced real estate attorneys may assist property developers and managers by performing background checks on prospective commercial tenants and reviewing lease agreements for vague language or ambiguous provisions.

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