Office Vacancy Rates and New Deliveries for three SoCal Cities

Voit released their Q1 CRE reports today. These reports are for several cities in the west: Los Angeles, San Diego, Orange County, Las Vegas, and more (these are for several categories of CRE - offices, retail, industrial). There is plenty of detail for those interested in CRE.

The following graphs show vacancy rate vs. new deliveries for offices in Orange County, San Diego and for the Inland Empire.

Click on graph for larger image in new window.

The first graph is from Voit for Orange County (not labeled).

New deliveries stopped a little earlier in Orange County than in some other areas, possibly because of all the subprime companies going under in 2007.

The fewer deliveries have helped, and the vacancy rate is starting to fall. But look back at the '90s - it took several years of falling vacancy rates before new deliveries started hitting the market. It will probably be a few years again this time too.

The 2nd graph is for San Diego (only back to 1999 - so we can't see the early '90s bust).

For San Diego, new deliveries didn't stop completely, and the vacancy rate has only declined slightly. Still net absorption is positive, but there probably won't be much new construction for a few years.

The last graph is for the Inland Empire.

Once again new deliveries have slowed sharply, but the vacancy rate still increased slightly in Q1.

The good news for employment and GDP is that new office construction in these areas can't fall much further. The bad news for construction employment and GDP is that construction probably won't increase significantly for a few years.