Cousins Properties Inc. (CUZ), a leading real estate investment trust (REIT), recently announced the layoff of 10% of its corporate staff to reduce costs amid the continued economic downturn.
Fundamentals are declining in many of the company’s office markets as corporate expansion continues to slow. More and more corporations are putting off leasing decisions until the economy recovers, which is not expected to happen in the next couple of quarters.
Recent employment trends are also not encouraging as the U.S. economy continues to shed jobs at a rapid pace. Till date, the U.S. lost about 6.7 million jobs since the start of recession in December 2007. The national unemployment rate also surged to 9.4%. As the U.S. economy plunges deeper into recession, office owners will have trouble holding tenants and leasing new space.
Furthermore, most of Cousins’ office markets are seeing large jumps in office vacancies. Office landlords in these markets will not be able to consistently raise rents until market vacancies decrease.
In order to tide over the storm, Cousins had earlier scaled back its retail and office development pipeline. With the recent reduction of its work force, the company further expects to conserve cash and remain afloat. However, we expect continued volatility in the sector.
Read the full analyst report on “CUZ”
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