Thursday, February 19, 2009

The Debts of the Spenders: U.S. Office Vacancy Rate to Climb to 16.7%

Feb. 18 (Bloomberg) -- The vacancy rate at U.S. office buildings will rise to 16.7 percent this year and could reach an 18-year high next year as tenants cut jobs and try to sublet space, property research firm Reis Inc. said.

The net amount of space leased will fall by 47.8 million square feet this year, one of the steepest drops in occupied space on record, excluding the loss of space from the 2001 destruction of New York’s World Trade Center, said Reis in its quarterly outlook. Asking rents will fall 5.4 percent and actual rents will fall 7.4 percent this year, Reis said.

Demand for commercial real estate of all types -- office, retail, apartment and industrial -- is weakening as companies slash payrolls and consumers cut spending in the recession. The Bloomberg Office REIT index has dropped 54 percent in the past 12 months on concern landlords will see income decline as tenants abandon space. Office building owners Maguire Properties Inc. tumbled 91 percent and SL Green Realty Corp. dropped 85 percent.


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