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Monday, January 07, 2008

Office Vacancy Rate Rises

by Calculated Risk on 1/07/2008 12:13:00 AM

Update: Reuters version: U.S. office vacancy rate rises first time in 4 yrs-Reis (hat tip r0m30)

From the WSJ: Office Vacancy Rate Rises For First Time in 4 Years. A few statistics from the article based on 79 metro markets:

The office vacancy rate rose to 12.6% from 12.5% in Q3.

Net absorption was slightly below 4.4 million square feet in Q4, compared to 16.2 million square feet in Q3.

19 million square feet of new office space was completed in Q4.

And on next year:

"... about 75 million square feet of new office space is scheduled to come online in the 79 markets Reis tracks, up from about 53 million square feet finished in 2007."
I'm surprised the vacancy rate only ticked up 0.1% with those low absorption numbers. The vacancy rate should rise faster in 2008 with slowing demand, and significantly more supply coming online. Also these numbers don't include sublease space - always a problem in a slowdown.