ST. LOUIS, April 14 /PRNewswire/ -- The latest data for the first quarter of 2010 shows that demand for U.S. office space continues to improve, according to Cassidy Turley, one of the largest commercial real estate service providers in the U.S.
Net absorption registered at negative 3.2 million square feet in the first quarter of 2010, marking the 5th straight quarter of decelerating declines.
"The first leg of the recovery begins when the office market returns to positive demand. The trajectory of recent job growth figures indicates that the U.S. economy will be consuming office space again by the second or third quarter of 2010," said Kevin Thorpe, Chief Economist at Cassidy Turley. "In other words, the office sector has not yet turned the corner, but it is at the cusp."
Despite decelerating declines in demand, the report reveals that the national office vacancy rate increased from 16.4% in the fourth quarter of 2009 to 16.6% in the first quarter of 2010, which is the highest vacancy rate since 2003.
"National vacancy remains elevated; it is now 260 basis points above its historical average," said Mr. Thorpe. "With a myriad of high-quality options for tenants to choose from, effective rents will remain low until the excess space is absorbed. It is a classic inventory overhang problem that can only be resolved with steady economic growth and time."
Net effective rents remained flat in the first quarter of 2010 at $23.88 – marking the first time in five straight quarters that rents did not decline.
"Based on the vacant stock figures, the U.S. is no less than 2 years away from seeing healthy rent growth again, but certain pockets within top tier markets will firm before then," added Mr. Thorpe.
Blogger's note: I wish the economy were improving. What we are told and what we see are two differnt things. I think we still have more declines in rental rates as the commercial market continues it's downward trend for at least the remainder of the year. There are still a lot of building owners with refinanincing needs coming up this year that are not going to be able to be met. I do not believe we have hit bottom, yet.Office Rental , Office Space , Office Space Negotiations , Office Vacancy Rate