The economy has taken a toll on many companies across the country, and many businesses are responding by trying to trim costs in several areas. While most businesses start cutting operating budgets and scaling down marketing and advertising services first when faced with a cash crunch, others often relocate to a more affordable commercial facility to cut mortgage or rental costs. For companies that are relocating to cut costs or expand, finding facilities in the future may be a difficult feat, new data shows.
A new report issued by the National Association of Realtors shows that commercial real estate vacancies are starting to decline. In addition to fewer vacancies, rental rates are rising, making it more costly for companies to take on a facility relocation or group move.
Vacancy rates for the next four years are expected to decline 1 percentage point in the office market, 0.6 point in industrial and 0.2 point for retail markets. For the office sector specifically, vacancy rates are expected to drop from 16.7 percent to 15.7 percent in the fourth quarter of 2013, with commercial spaces shrinking primarily in Washington, D.C., New York City and New Orleans. Further rental rates are expected to increase 2 percent this year and 2.5 percent in 2013. These increases include leasing new spaces as well as existing office spaces.
“Job creation is the key to increasing demand in the commercial real estate sectors,” said Lawrence Yun, chief economist for NAR. “The economy is expected to grow 2.5 percent next year, and with modest job creation, assuming there is no fiscal cliff, the demand for commercial space will gradually rise. The greatest friction that remains is a tight credit environment, notably for smaller properties.”
Curbing the costs of an office relocation and employee group move
There are some actions businesses can take to eliminate costly issues and scale back overall costs when making a move, such as utilizing a the services of a relocation management company. Professionals will walk companies and their workers through every aspect of a group move, which can lead to more organization and assimilation, both of which reduce company costs. In addition, service providers may help companies curb overpaying for associated moving costs, all of which can total thousands of dollars for a large-sized company and their employees.