NEW YORK CITY-There might be good news on the horizon, according to results from PricewaterhouseCoopers fourth quarter 2004 Korpacz Real Estate Investor Survey. Steady declines in office vacancy rates across most of the nation’s major markets, together with persistent reports of a continually strengthening economy, are helping many investors finally see the proverbial “light at the end of the tunnel.”

“We saw the reinforcement of Manhattan being a tale of two cities,” says Kevin Danehy, EVP and senior managing director at CB Richard Ellis. “Midtown is recovering and has gone from negative to positive, while Downtown is still flat.” However, he anticipates there will be a number of large leases in Lower Manhattan in 2005. “Everywhere else there is a lack of large blocks.”

The year saw the rebound of the financial services market in Manhattan, Danehy points out. “Citigroup and Lehman Bros. are taking up incremental space.” A number of media companies also made the city a “media hub” once again, he adds.

“With vacancy rates edging down in many markets and underlying economics heating up both nationally and locally, there has been an unending supply of capital looking to be placed into commercial real estate,” says Peter Korpacz, director, PricewaterhouseCoopers’ Global Strategic Real Estate Research Practice.The office market in Minneapolis is finishing the year with positive absorption. Go to, Twin Cities Office Market Gains Momentum for additional information. And in Los Angeles, office leasing has picked up, but is not as strong as the sales market. For more, go to Leasing Lags But Sales Soar.

In addition, firms looking to lease space in Houston at rock-bottom prices may be too late. According to Grubb & Ellis, rents are expected to rise by as much as 5% in 2005. For more information, go to Office Market To Post Rent Increase Next Year.

According to the PwC survey, the continuing popularity of commercial real estate as an investment of choice is in part due to unimpressive returns registered by alternative investments–as well as to what have been essentially minimal increases in long-term interest rates. “While many investors continue to focus on acquiring stable, low-risk assets, more and more are concentrating on value-added opportunities,” Korpacz adds.

Korpacz notes that investors can expect more of the same in the coming year. “Investors are likely to find the investment arena as competitive and pricey in 2005 as it was in 2004.”

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