MALVERN, PA-Liberty Property Trust has held up relatively well in the recession compared to other REITs, but the company does face its share of challenges, said William Hankowsky, its chairman, president and chief executive officer, at NAREIT’s REITWeek conference in New York City. “We’re clearly seeing rents down,” he said. “Rents are an absolute battleground.”

The good news is that Liberty executives are seeing fewer troubled tenants now than they did in this year’s first quarter and last year’s fourth quarter. Now, fewer companies are flat out going out of business, and instead, are deciding to consolidate their locations and close branches.

“These aren’t deals we lost to competition,” Hankowski remarked. “This is just square footage that is left on the market.”

On the industrial front, most users are currently looking for space in the 250,000-square-foot to 300,000-square-foot range, while larger vacant spaces aren’t leasing up as quickly. “If you have a big box, you’re probably subdividing it,” Hankowski said.

The strongest office market he sees in the firm’s portfolio is the Philadelphia Metro area, while Jacksonville, FL and Richmond, VA are suffering the most.

Liberty plans to sell $160 million in assets this year and $200 million next year. Dispositions aren’t tough for the REIT in this environment because their 750 properties average 100,000 square feet, a manageable size for the few buyers out there, Hankowski stated.

The market probably won’t see any acquisitions by Liberty any time soon, though. “There’s got to be a batter bringing together of the buyer-seller pricing reality,” he said. “Our belief is that patience is a good thing in this market.”

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