Both office & industrial vacancy rates eased in Q3/98
By DARYL DELANO -- Industrial Distribution, 3/1/1999
The overall national office vacancy rate continued to fall during the third quarter of last year, according to data from the latest survey conducted by the commercial brokerage/real estate information firm of CB Richard Ellis.The combined vacancy rate for total downtown and suburban space within metropolitan areas fell to 9% for the quarter ended in September 1998, down from 9.2% in the quarter ended last June and from the 10.5% rate recorded in the fall of 1997. For the first time since 1993, the downtown vacancy rate (8.9%) has fallen below that of the suburbs.
CB Richard Ellis analysts say that overall demand for new office space increased between the second and third quarters of last year, as significant new supply in the suburbs relieved spot market shortages and released a measure of pent-up demand.
Total net absorption of office space went from 17.7 million square feet in the second quarter to 20.2 million square feet in the quarter ended September 1998.The vacancy picture for industrial and warehouse buildings with 100,000 or more square feet of space also improved between the summer and fall of 1998.
The national industrial vacancy rate fell back to 8.3% during the quarter ended last September. This followed a rise to 8.6% between the spring of last year and the quarter ended in June, and brought vacancies back to the level that has prevailed throughout most of the past two years. Weakness in industrial construction spending suggests that the improvement in market vacancies can be attributed much more to a decline in new supply than to any groundswell of new demand for manufacturing and warehouse space.
About two-thirds of the 46 industrial markets surveyed by CB Richard Ellis registered declines in vacancies between the second and third quarters of last year. The sharpest over-the-quarter drops were recorded in vacancies in the Salt Lake City (-5.2%), Austin (-5%), Indianapolis (-3.1%), and Tucson (-2.3%) markets.
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