Many market watchers say commercial real estate is the next shoe to drop.
Philadelphia shows why:
Inquirer: For one, landlords will not assume that tenants, especially established, high-profile tenants, are forever. As a case in point, real estate professionals refer to this year’s dissolution of the venerable Wolf Block law firm, which added 175,000 square feet of vacancy to Philadelphia’s Market Street West submarket.
“The days are gone when you would [assume] a major law firm would be around for 60 years and give them $10 million in [building-improvement] capital,” said Dave Campoli. He is a regional vice president for HRPT Properties Trust, a national real estate investment trust with nearly 5 million square feet of commercial office space in Philadelphia.
In the new world, Campoli said, such a law firm likely will have to put up a portion of the cost of any site improvements it wants.
As more firms and businesses cut back on staffing and hiring, they will curtail office space as needed, thus increasing the amount of unused commercial real estate available.