According to a recent CoStar Blog post "Banks reported that commercial real estate markets displayed mixed results - still mostly negative - but that leasing markets and investment exhibited increasing signs of recovery, while nonresidential construction remained weak."
This doesn't mean that a full recovery is near, but any signs of improvement are good.
"We expect that the worst of the commercial credit cycle is behind us but
we expect a few more quarters of uncertainty and choppiness in
commercial charge-offs and non-performers."
Richard D. Fairbank, founder, chairman, and CEO, Capital One Financial Corp.
Via: OfficeTimes Blog
Buying Office Space , Office Space , Office Vacancy Rate
According to a recent article in the Finance and Commerce CCIM Report "Nationally, office vacancy rates stood at 19.5 percent in the third quarter of 2010, about the same as in the second quarter and just 50 basis points above the rate in the third quarter a year ago. Vacancy and rental rates across all property types were in a stabilization pattern in the third quarter of 2010. Rents are now 6 percent to 18 percent below their prerecession peak... Office rents are down 12 percent."
More news to show that we have hit bottom in the office space market and will begin the slow climb out.
More information on Office Vacancy Rates
Find Office Space
Lease Negotiations , Office Space , Office Space Negotiations , Office Vacancy Rate
Over the past nine months we have made numerous posts on the effect that shadow office space will have on the office space market recovery. In a recent article from CNBC some numbers show the effect that shadow office space will have on the market. According to Co-star shadow space is adding as much as 7 percent to the Los Angeles office vacancy rates and over 6 percent in Chicago. This is likely to be the case in most markets. The problem with shadow office space is that before the market can see a full recovery, shadow office space will need to be absorbed. Typically, shadow office space is space that a company still has under lease, but is not in use. Before these companies who have shadow space will go out into the market to lease additional office space, they will need to fill their shadow space.
Additionally, Grub and Ellis is predicting that as the market recovers shadow space will account for about 1/3 of the increased demand in 2011 and 1/4 of the office space demand in 2012, thereby dampening the office space market recovery. The good news is that we are starting to see positive absorption. As the jobs come back, the office market will improve.
Find Office Space
Chicago Office Space , Los Angeles Office Space , Office Rental , Office Space , Office Space Negotiations , Office Vacancy Rate
According to an recent article at Reuters.com, the US is approaching the turning point in the office space downturn and should start to see a slow recovery over the next couple of years.
"The U.S. office vacancy rate is expected to peak in the middle of next year at 16.8 percent, as it did in 2003, and is expected to fall very slowly to 16.4 percent by the end of 2011 and to 15.3 percent by the end of 2012, according to CBRE Econometric Advisors.
Real estate research firm REIS Inc also sees a slow office recovery. REIS sees the U.S. office vacancy rate peaking at 17.7 percent at the end of this year and then slipping to 17.4 percent by the end of next year.
"There's nothing in the job market that's pointing to a quick lease-up of space," said Victor Calanog, REIS director of real estate."
The good news is that the bottom appears to be near. The bad news is that it will be a long slow recovery that will most likely parrallel the economic recovery of the US.
There are a few major markets that are already seeing good improvement. Both Manhattan and Washingtom DC has seen a lot of leasing activity. Ironically, they are the two most expensive markets in the US.
More on Office Vacancy Rate
Find Office Space
Manhattan Office Space , New York Office Space , Office Rental , Office Space , Office Vacancy Rate , Washington DC Office Space
According to a recent report from Colliers International, it appears that the U.S. office space market has turned the corner and absorbed 6.5 million square feet of office space during the third quarter of 2010 compared to only 1.8 million sq. ft. of absorption activity for the previous quarter.
It was the major office space markets that showed the largest office leasing absorption for the quarter. Among those, the Washington, DC office space market showed over 882,000 square feet of net absorption during the quarter, resulting in an office space vacancy rate of only 11.6%, the lowest in the nation. The Washington, DC office rental rate increased to $52.32 per square foot, an increase of $1.06 over the previous quarter. The rental rate and absorption gains are mostly due to the addition of new government jobs and a limited supply of new office space coming on line during the quarter.
Also of interest, during the 3rd quarter the amount of sublease office space nationally continued to decrease, to only 7.6%of total office space vacancy compared with 8.2% at the end of the 2nd quarter.
The national office space vacancy rate decreased slightly from 16.3%to 16.2% during the third quarter, but it still is above the 16% at the end of the 3rd quarter 2009.
Find Office Space
Lease Negotiations , Office Space , Office Vacancy Rate , Sublease Office Space , Washington DC Office Space