BOMA Market & The Banking Crisis - What's Ahead

THE RACE FOR TENANTS

The fallout from the banking crisis is coming. For the BOMA market in the GTA it is time to take action in preparation for the consequences for owners and managers.

Quality tenants and vacancy rates are going to be an issue on profitability for the next several years.

Recent & Expected Events in the BOMA Market

• Several malls in multi-use complexes in the U.S. have seen bankruptcies by major anchor tenants. Larger retailers and food chains have simply closed up.
• Financing/refinancing for current and planned projects just got a lot tougher to get, and more expensive putting pressure on profit margins when rents will be softening.
• Insurance underwriting dollars just became more scarce and expensive which could also lead to financing difficulties (make yourself the best risk!)
  
• Consolidation in the banking and insurance industry will inevitably lead to those businesses rethinking their space and facility strategies to reduce costs. This will have a major effect in the class "A" buildings as expansion plans are stalled, reductions or terminations of leases are on the table.
  
• In the GTA new building stock is coming on line that will drive the vacancy rate from it's current rate of 3.9% to over 12%
• Renewing tenants are going to be looking for better deals, and are going to be offered better deals by the competition.

Now is a good time to start shoring up your value proposition, looking at your costs, your vendors, and your facilities for how you can attract or retain quality tenants.

Remember the Chinese word for crisis, is made up of two words......Danger & Opportunity, this will be a time for smart operators and owners to profit.