NEW YORK CITY-Where is corporate real estate headed? Anywhere but up, according to’s latest Quick Survey. At least not for the foreseeable future, say respondents as they reflect on the effects of the economy on corporate America’s expansion attitude.

No doubt, the almost daily news stories of massive corporate layoffs have had their effect on real estate, and 44% of our participants record that they have personally seen corporate leasing activity drop off by as much as 25%. Some 31% of our respondents have seen companies curtail their plans by 26% to 50%. There have been eyewitness accounts of a 51-to-75% drop in leasing by 18% of our poll. Only 7% have seen heavier curtailments.

In a new option for, Quick Survey’s respondents were able to file in-depth thoughts on their answers. Their commentary provides interesting depth to the raw numbers. “The sad thing is there seems to be no light at the end of the tunnel,” stated one writer. “It’s dark in here!”

Of course, not all respondents voiced doom and gloom. “The economy should begin a comeback in 4Q ’01,” writes one participant. “Demand for space should start increasing 1Q ’02.”

Another writer is more frank: “The downturn is real, but not as severe as the media hypes it to be.”

But numbers don’t lie, and survey-takers say the next 12 months will bring more of the same. In fact, 66% of our respondents predict a decrease in space needs for the next year. Only 15% foresee an increase, and 19% guess that there will be no change.

“Major corporate space consolidation has not yet peaked in this down cycle,” says another writer. “It will get worse before it gets better.”

That sentiment was echoed in a number of essays. As another writer observed: “We are headed for a further slowdown. Until the employment picture picks up, we are in for some lean times. Interest rates can’t overcome unemployment!”

Not surprisingly, much of the activity that does take place is likely to entail shedding of space, and 57% of our surveyed professionals say that dispositions will be on the increase. Some 24% predict that they will slow, and a middle-of-the-road 19% say that the rate of dispositions will remain at current levels.

One writer offers advice for building owners beset by retracting tenants: “The best opportunity now is for existing owners to refinance into less costly long-term debt as a strategic way to offset profit losses.”

“As a provider of outsourced services to major corporations and institutions, more than 50% of our pipeline today is disposition assignments–and it’s growing,” observes another participant.Some day, of course, the teeth will return to the market, and corporate real estate will be on the move again. What will be the hold of choice? Direct leasing will continue to be the favored deal structure, according to 49% of our participants. But sale/leasebacks are not that far behind, garnering 38% of the vote.

But the sale/leaseback might simply be a way of staving off the P&L shock of the current economy, says one writer: “We are seeing evidence of sale/leasebacks being a source of much needed capital by many corporations such as Xerox.”

Facility ownership, by the way, got the nod of 13% of respondents.

So activity will return, as surely as day follows night. But dawn won’t come soon enough to satisfy at least one writer. “Until earnings improve, layoffs abate, real hiring begins and corporate investment in plant and equipment resumes,” he writes, “corporate real estate will be static to declining as more sublet space clogs the pipeline. Look for two or three more quarters of this.”

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