Initial leasing data for the first three months of the year show that this could be the weakest first quarter in at least 18 years, with only 4,912,278 square feet of activity. I say “could” because there are still a few days left in the month. Also, there are almost always leases added after additional cleaning and scrubbing of the data.
Nonetheless, activity to date is just 41 percent of the almost 12 million square feet from one year ago. That first quarter of 2011 was the best first quarter since 2000, when the figure topped 17.6 million square feet. Focusing on the mega-deals of 100,000 square feet and greater, the sharp year-over-year difference stands out with only five of these deals completed this year compared with 22 one year ago.
So what’s up with the low figure? Part of it is simply due to the natural ebb and flow of the market. There was also very strong leasing last year in anticipation of job growth in the near-term; some major tenants signed deals well ahead of their lease expirations, expecting asking rents to climb sharply during the recovery. The weakness in the financial services sector, where many tenants are somewhat frozen in place due to a variety of unclear potential rules, is also affecting leasing; it doesn’t help that this is an election year, which could greatly affect these regulatory actions. No doubt, leasing activity will pick up again as we move through 2012—leases expire, job growth has been strong and the election will, thankfully, be settled soon enough.
Robert Sammons, Cassidy Turley