Capitulating, the act of surrendering or yielding, typically is associated with the military, and more recently, the stock market, notes Platt in his latest report.
"We have seen landlords 'throw in the towel,' in the last three months," according to the report. "Landlords have told the market 'We will do whatever it takes to get a deal done."
What it takes, apparently, is a wholesale drop in lease rates.
In the first quarter, class A space was commanding rates of $3.75 to $4.25 per sf. But the last few deals in the $3.15 to $3.25 range, a 15% to 20 % drop in one quarter.
Meanwhile, there's a record 5.7 million sf of vacant space on the market, a 16.6% jump from the first quarter, when there was 4.89 million sf of vacant space.
The vacancy rate also has leapt in one quarter to 11.58% to 9.99%.That's the bad news.
The good news is that the worst may be close to over, the report notes."The theory in the stock market capitulation is once you have 'capitulation selling' the bottom has been reached," the report says.
Trammell Crow projects that the bottom will come in the third quarter, with the vacancy rate topping out at 11.9%. Rents are expected to firm by year end."It may be time to dust off that copy of the Art of War," Platt adds.
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