Friday, January 06, 2012

Reis: Office Vacancy Rate declines slightly in Q4 to 17.3%

by Bill McBride on 1/06/2012 12:05:00 AM

From Reuters: Office vacancies fell in Q4 as rents rose: Reis

The vacancy rate dipped to 17.3 percent in the quarter from 17.4 percent in the third quarter and 17.6 percent at the end of 2010, Reis said. ... effective rents ... rose 0.5 percent ... Some 12.3 million square feet of new office space came to market last year, it said, the lowest such level in 15 years.

"After four quarters of squeezing out gains in occupancy, the office sector has assuredly turned the corner and begun the process of recovery," Reis research chief Victor Calanog said ... "Still, given the severity of the last downturn and the lackluster pace of economic growth, it will be years before the office sector climbs out of the hole."
Office Vacancy Rate Click on graph for larger image.

This graph shows the office vacancy rate starting in 1991.

Reis is reporting the vacancy rate declined to 17.3% in Q4, down from 17.4% in Q3. The vacancy rate was at a cycle high of 17.6% in Q3 and Q4 2010. It appears the office vacancy rate peaked in 2010 and is declining very slowly.

As Reis noted, there are very few new office buildings being built in the US, and new construction will probably stay low for several years.