FOR IMMEDIATE RELEASE
Contact: Media Relations
Telephone: (305) 379-7500
Letter from the Chairman & CEO – January 2015
Miami, January 2015
Last year we celebrated our 25th year as a value-add operator focused on the primary office markets of the southeast and southwest. As we start a New Year, I would like to extend you my best wishes for 2015.
For the first time in my career I am witnessing the development of a supply/demand imbalance fueled by increasing demand on the part of tenants and a lack of new office construction in many of the markets in which we invest. The last wave of significant new construction was during the 1980’s and early 1990’s and limited new construction is expected as current rental rates, in most cases, do not support new construction in Parmenter’s target markets. Many of Parmenter’s investments have seen rental rate increases of some 10% over the past twelve months. With what I believe will be an expanding economy as a whole, coupled with limited delivery of new office inventory, I would expect rental rates to experience continued increases.
As we ended 2014 the national vacancy rate was 15.6%, its lowest level since 2008 and only 1.8% greater than the pre-recession low water mark of 13.8% according to JLL market research. According to Costar, Parmenter’s share of occupied office space in the United States continues to increase at a faster rate than the national market as a whole. This growth is, in part, evidenced by a number of key corporate relocations into Atlanta (Mercedes, State Farm and GM’s IT division), Dallas (Toyota), Tampa (Amazon) and Charlotte (Chiquita Bananas). Each of these corporate moves resulted in both significant increases in jobs and a positive impact to these cities’ local economies.
Parmenter has long invested in urban infill markets which are now being sought by millennials as part of this cohort’s preferred live, work and play environment and lifestyle. To attract this younger talent, employers are relocating to these urban centers where housing, retail, dining, and walk to work or convenient transit is available. JLL has reported a 470 basis point spread in occupancy between urban office centers and suburban office environments as a result of this phenomenon and I would expect this trend to continue.
The 2015 edition of Emerging Trends has newly placed Raleigh-Durham, Charlotte, and Denver in the top ten overall scores in its ranking system with Charlotte being rated in the top ten for investment. In addition with a national recovery in the housing market, Emerging Trends found that Charlotte, Raleigh-Durham, and Denver joined by Portland and Atlanta are among the ten most promising markets for continued growth and expansion.
Parmenter’s success over the years is the direct result of many factors which include having “boots on the ground” in four offices in our target markets. We believe this local market presence is critical, not only to build and maintain our network of relationships which leads to privileged access to deal flow, but to maintain our pulse on the local market dynamics and allow us to be in closer proximity to our lifeline – the assets we own and operate. This coupled with the supply and demand imbalance, lack of construction in most of our target markets, the influx of corporate users solidifying the Southern Primary cities as ideal work, live and play locations in which millennials want to live, all position Parmenter and our partners to best capitalize on the opportunities over the next few years.
Darryl W. Parmenter
Chairman and Chief Executive Officer
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For more information on this topic please contact Parmenter Media Relations by calling (305) 379-7500 or via e-mail at MediaRelations@parmco.com.