Predicting new office development in any metro area requires a seasoned soothsayer. Conflicting real estate market indicators have some observers uncertain about when and where the next new office buildings will rise and, furthermore, if they’ll be affordable at the pricey rents landlords may need to charge. Construction costs have been on an unforgiving rise for many years, and the rental rates being charged to cover the cost of raw materials are sure to give some potential tenants pause. Amid mixed signals, there is a point of consensus: most real estate experts believe new office buildings will be announced in the next 12 to 18 months, with delivery likely in 2012 or 2013. Few, however, think developers would build such buildings without a client or clients signed on. “Construction will likely be of single-user buildings or ones that are heavily anchored by a single tenant,” says Jeff LaFavre, managing principal of Colliers Turley Martin Tucker, a commercial real estate firm located in Minneapolis. To make a new building feasible, landlords will most likely have to charge rents that are higher than those of preexisting buildings.
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