The New Year hasn’t ended the old problem of vacant office space across the US
Nationwide office space vacancy rates have risen sharply in 2009, with millions of square feet of prime real estate lying empty.
While the residential housing market seems to be stabilizing, its commercial cousin is still in free fall, according to Santa Ana, Calif-based Grubb & Ellis. During the recession some experts estimated half of all those unemployed were “white-collar” workers and it is predicted that this increased availability will continue to plague the commercial real estate market in the New Year.
New Jersey’s Gold Coast in Hudson County and Parsippany were hit the hardest, according to the report. Each registered more than 1.1 million square feet of sublease space at the end of 2009. “Limited leasing velocity involving corporate relocations and consolidations, rather than significant real estate expansions, was a recurring theme of the Northern and Central New Jersey office market during the past year,” Grubb & Ellis said in a statement. “And, (it) is forecasted to plot the course of the market into 2010, as well.”
The vacancy rate in downtown Baltimore has soared to nearly 18 percent in the past year, battered by bank consolidations and corporate moves to other parts of the city and region. Downtown’s vacancy rate climbed to nearly 18 percent, up from just 10.3 percent a year ago, according to a quarterly report by Cushman & Wakefield Inc. in Baltimore.
The past year has also brought more empty space to office and industrial buildings in the Indianapolis area. Downtown office buildings fared the worst, with the vacancy rate jumping to 18 percent in December from 15 percent a year earlier. That’s the highest vacancy rate for the Downtown office market since late 1994, according to CB Richard Ellis brokerage, which released its year-end commercial real estate report Tuesday. Much of the jump came from companies downsizing and then trying to sublease unneeded space.
In Houston demand for office space was the worst it had been since the oil bust.
Houston companies slashed some 90,000 jobs, and the year posted 2.74 million square feet of negative absorption, meaning more space emptied out than was occupied, according to CB Richard Ellis.
“We have a long way to go until we get back to needing the amount of space we did,” Sanford Criner, executive vice president of CB Richard Ellis in Houston, said last week at a commercial real estate outlook luncheon. In 2010, experts anticipate more negative absorption, deteriorating rental rates and increased foreclosures.