Green Shoots for Developers at the Edge of the Fiscal Cliff
After nearly five fallow years, developers start to see (a few)opportunities beyond the obvious ones for apartments. In anygateway market, building an efficient floor-plate, LEED gold orplatinum office tower will command attention from tenants who startto pay up for the chance to reduce their operating costs. They canlower utility bills, gain greater flexibility and decrease futureexpenses in altering layouts, win kudos and possibly attract youngtalent for using environmentally correct space, and buy into thenotion that more natural light and fresher air creates healthier,more productive work environments. These new wave buildingssuccessfully leech tenants out of last generation space and can becheaper to build than buying existing trophy product at current caprates. The only losers here are past generation, brown buildingswhich cannot hold onto tenants. It’s another sign that pricing forexisting trophy product in these 24-hour markets may have peaked orat least leveled off.
Logistics and distribution space—again in the prime gatewaydistribution hubs—also may be ripe for selective new development asmajor e-commerce purveyors ramp up shipping activities nearpopulation centers in capturing greater retail market shares.
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