Office Market First Quarter 2009
In particular, the Colliers report indicates that US office market performance in the first three months of 2009 was the worst since the third quarter of 2001, as the national vacancy rate climbed to 14.74%, 95 basis points higher from its fourth quarter 2008 level. Vacancy rate increases were slightly differentiated across downtown and suburban markets. In particular, the downtown vacancy rate increased 87 basis points to reach 12.79%, while the suburban vacancy rate increased 98 basis points to climb to 15.66%. Landlords faced with weak tenant demand and a modestly increasing supply of office space were forced to lower rental rates in order to attract new tenants and keep existing ones. Colliers International points out that rent declines hit both downtown and suburban markets, with the former feeling the most intense downward pressures. Colliers predicts that while the economy may bottom out sometime in the third quarter of 2009 the prospects for office market recovery are not encouraging until well into 2010 or perhaps 2011 due to the weak job market, which is expected to continue deteriorating until early 2010. |
