Signs of Life in Commercial Real Estate Market

Signs of Life in Commercial Real Estate Market

Good news bad news in the commercial office space.  According to a comprehensive report issued by CB Richard Ellis, "The Downtown office vacancy rate increased from the 17.21% at the end of 2009 to a current level of 18.90%. Despite this increase in vacancy, 2010 was actually a much better year then it could have been based on the mid-year vacancy rate of 21.53%."

The news statewide was a little rosier, as the statewide office vacancy is down to 20.46% according to a 2010 year-end report by CB Richard Ellis.  Suburban vacancy fell 3.78%, from 25.51% to 21.73% over the course of 2010.

2010 downtown activity consisted primarily of renewals and rightsizing by existing tenants, but there are currently large requirements in the market that are expected to select locations early this year, according to the report. If these requirements follow through, 2011 vacancy rates could potentially fall to 2008 levels.  After reporting 365,000 square feet of negative absorption in 2009, suburban landlords lowered rental rates in every submarket, resulting in a significant turnaround in 2010: a net positive absorption of 131,340 square feet at year-end.  

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After reporting 365,000 square feet of negative absorption in 2009, suburban landlords lowered rental rates in every submarket, resulting in a significant turnaround in 2010: a net positive absorption of 131,340 square feet at year-end. 

Charts: Source CB Richard Ellis