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<br /> www.ctmt..com BRCKE.RALE.! CCRPb SATE SIwP~2ICES;APPRAISA 9iCOi1SU -'1' G,.;I°R l•---,',. F=A ILITY ASSET MANAGEMENT f R SEARCH
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<br /> creating Economic
<br /> conomi Merger and Acquisition Activity on the Rise — Implications for Real Estate
<br /> vailtie For,For,Ourclients i3''Ross Moor P. Vice Ptesident, Director of Research, Collieas internalonai
<br /> �
<br /> The last few months have seen a dramatic increase What is the impact of this trend on real estate mar-
<br /> in merger and acquisition (M&A) activity. December kets? The logical answer would be that M&A's lead
<br /> 2004, in particular, was the most active month for to consolidation, layoffs and a corresponding reduc-
<br /> 'E global M&A activity since August 2000. This caps off tion in demand for space. In the short term, mar-
<br /> Merger and ` a busy year for investment bankers, for whom global kets are characterized by uncertainty and disruption.
<br /> Acquisition Activity
<br /> M&A activity totaled $1.95 trillion, a 41 percent in- In the medium and longer terms, assuming a grow-
<br /> on the Rise ,; crease over 2003 levels. Recent M&A's include: ing economy, companies generally overestimate the
<br /> savings and synergies of combined entities and end
<br /> Jobs',lobs and More Jobs •• Oracle/Peoplesoft up taking-back space that was initially slated for the
<br /> • Johnson&Johnson/Guidant sublease market. That appears to be the case with
<br /> Significant Transaction • Proctor&Gamble/Gillette the Oracle/Peoplesoft merger, and also the Bank of
<br /> • SBC/AT&T America/Fleet and Manulife/John Hancock acquisi-
<br /> CTMT elects • Verizon/MCI (announced) dons. M&A's are a normal part of the business cycle
<br /> oMCaffre to SrYe and will eventually run their course.Talk of consolida-
<br /> n Nat onal Board Iaf Will this trend in M&A's continue? Probably. Corpo- tion and the reduced
<br /> Directors rations are sitting on large amounts of cash and are need for real estate
<br /> looking for ways to put these funds to work.Cash bal- will fade as quickly as
<br /> ( alliers'1i ley Martin ances will most likely grow larger with the temporary it came to the fore. In-
<br /> ,,rocker Completes lowering of taxes paid on repatriated funds,which will creased M&A activity
<br /> 65,000 sq,sq ft Lease
<br /> only exacerbate the situation. Equity market valua- will only act as minor
<br /> tions are high and acquisitions are a quick and rela- drag on an otherwise „
<br /> for the Institute of tivelycheapway (particularlywith high stock prices) healthyleasingmarket
<br /> New Americans g
<br /> to create growth. in 2005.
<br /> l aft"
<br /> Jobs, Jobs and More Jobs k INFORMATION
<br /> source:Colliers Irtonotionui
<br /> Last Friday's job report from the Bureau of Labor Sta- cilities to grow.With the economy performing at the
<br /> tistics was very encouraging. For the month of Febru- higher range of projections made at the outset of the
<br /> ary, 262,000 jobs were created.This is well in excess year, we may have to revise our already bullish fore-
<br /> of what was anticipated, and the best monthly gain casts for absorption across all property types.
<br /> Isince October.Of significance was the growth in man-
<br /> 1 ufacturing jobs,a first since August of last year.Almost
<br /> ' every industry saw job gains, with construction up 040 Jobs Created in February The
<br /> 30,000; professional and business services +81,000, zestMc�nttltyG ins „t3>rtober �e
<br /> health care+23,000 and retail +30,000. ear
<br /> 350f
<br /> With job growth on the rise, and business spend-
<br /> 300 ,
<br /> zsfr
<br /> ing becoming more robust, many economists have li2o ;,
<br /> r bumped up QI GDP growth to over 4.0 percent and 15e
<br /> indeed, first half economic growth looks likely to sig- t00
<br /> '� '00 S.Sixth Street nificantly exceed forecasts made at the beginning of 1111111111111-1.. .,. .>. ,..
<br /> v,-,quite 1400 the year. This is all good news for commercial real .I- F M A 1I J J A s o N 0 J- F
<br /> Minneapolis, MN 55402 estate, which will continue to benefit from more 04 . fi
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<br /> 612/341-4444 people working, and businesses that require new fa-
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