— Office leasing companies are facing tough competition as they seek to capture the vast majority of office space in a growing number of states.
Some leasing companies offer high rates to attract people who want to rent office space.
Others charge a premium for leasing space in certain areas.
But others are struggling.
“It’s not just the cost of living, it’s the cost to get your business to grow,” said David Purdy, an office leasing broker and owner of Purdy & Co. in St. Paul, Minn.
The demand is so strong, he said, that leasing companies can’t compete.
For years, leasing companies have sought to keep pace with the expansion of digital services, the Internet, and social media.
But the industry is now grappling with a more challenging economic environment and a changing customer base.
We are facing an unprecedented crisis of supply in the U.S. and it’s a growing challenge for us,” Purdy said.
In 2016, the National Association of Realtors reported that vacancy rates at leased office space were at their highest in six years.
In the first quarter of 2017, that rate was down 12 percent from a year earlier.
The industry’s outlook is bleak, according to a survey of about 500 leasing companies released Monday by consulting firm J.P. Morgan.
Many are struggling to meet their leasing needs.
The National Association estimates the average leasing company lost $8.8 million last year, and the average lease price per square foot was $2,000 less than a year ago.
The survey also showed that only about 15 percent of leasing companies in the Midwest are operating at full capacity.
In addition, many leasing companies don’t have enough employees or money to pay the rent on office space they lease.
Many leasing companies say they’re taking a risk by taking on a high-cost business.”
Some leasing firms say they will take on more risk in an effort to increase their occupancy rates.”
If you can’t afford to do business, it doesn’t work.”
Some leasing firms say they will take on more risk in an effort to increase their occupancy rates.
But leasing companies also are taking on more risks in an attempt to increase occupancy rates, especially in the face of the recent economic crisis.
The office space industry in Michigan has been battered by the Great Recession, which saw companies close and close more than 2,000 jobs.
At the same time, the market is growing again.
It has grown rapidly in recent years and now accounts for about 13 percent of U.P.(gross value added) in the state, according the State Business Office of Michigan.
The growth of the industry, especially office leasing, is making it harder to maintain full occupancy rates even though the industry continues to thrive, Purdy and other brokers said.
The leasing market in Michigan is now larger than the residential real estate market, but the office rental market is smaller than the other.
The National Association predicts that the number of office lease offices will grow to 1.9 million by 2021.
But many leasing businesses are struggling as the rental market heats up.
AIA Group expects to see more than 400,000 new office lease tenants by 2022.
If the number keeps growing, the real estate industry will need to attract more people to the office, said John Deutsch, president of Deutsch Realty, a Detroit-based leasing company.
The number of people seeking to rent space has increased as demand has increased.
And some leasing companies aren’t sure how they will compete with people who prefer to live in apartments.
But some of the companies that are expanding the office business are seeing strong demand from customers who want flexibility and who want more options.
The largest leasing company in Michigan, AAA Group, expects to have 2.4 million square feet of office leasing space available by 2020.
The company’s chief executive, Mark Kogan, said the company is considering leasing office space to other companies to better compete with companies that have higher rents.