October 7, 2009
REIS is out with data on the US vacancy rate, and it continues to hike down the hill. Vacancy is now at 16.5%, a five-year high. Meanwhile, office space rents are falling at the fastest pace in a decade.
Negative absorption in the third quarter proved to continue at a greater level than it did in the second quarter. In the trailing twelve months, the largest declines have occurred in New York (-18.5%), San Francisco (-15.7%), Orange County (-15.4%), and San Jose (-13%).
Of the 79 metro areas that Reis tracks, office vacancies rose in 72 of them and effective rents declined in 68 of them.
As we’ve indicated before (here [Q2 2009] and here [Q3 2009]), unemployment will continue to hamper vacancy rates and rents for some time given the lag between turns in unemployment and turns in the office market. Therefore, it is fairly safe to assume that weakness will continue for a minimum of 12 months as unemployment numbers continue to show weakness, and the job market continues to shed jobs.
- Q3 2009 Update: Silicon Valley Rents, Vacancy Rate, and Unemployment Numbers
- Surprise: San Francisco Office Rents Are Falling
- Apartment Investors Out In Full Force
- U.S. Office Vacancy Rate Set To Soar
- CBO: US Unemployment to Continue to Rise Through 2010