While two-thirds of those executives plan to add space by 2005, the market may be softer than current vacancy rates indicate, Jones Lang LaSalle managing director of corporate finance Kenneth Rudy suggests. That is because a large amount of "shadow space" has yet to be accounted for, he says.
"The findings may also point to the possibility that companies have not yet gone through the process of ensuring that space meets all requirements for impairment, including completely vacating the space and physically disconnecting it from the rest of the company," Rudy explains. "If this is the case, we could see increased levels of impairment within the next six months as companies work through the accounting hurdles required for impairment."
Jones Lang LaSalle's survey reveals about 90% of corporate real estate executives expect to be charged with cutting costs in the next 18 months, most likely by eliminating excess space or consolidating operations.
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