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Friday, April 04, 2008

San Diego Office vacancy rate 'skyrockets'

by Calculated Risk on 4/04/2008 01:32:00 PM

From Mike Freeman at the San Diego Union-Tribune: Local office vacancy rate skyrockets

San Diego's office vacancy rate spiked to its highest level since 1996 in the first quarter thanks to a combination of weak demand and new buildings coming to market.

Direct vacancy – landlord-controlled office space that's empty – was 15.1 percent countywide, according to a CB Richard Ellis report issued yesterday. That's up from 11.5 percent a year earlier.
Net absorption – a real estate term that measures the amount of space leased versus the amount vacated – was negative 190,000 square feet for the quarter.
The slumping demand comes after a wave of office construction over the past couple of years.
For residential real estate, San Diego was one of the first cities impacted by the housing bust (declining transactions, falling prices). So it's not surprising that San Diego would also be one the first cities with falling demand for office space - while the supply is still rising due to the commercial real estate construction boom of recent years.

The combination of falling demand for office space, and increasing supply, will probably be repeated in many cities across the country.