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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (46338)	1/14/2002 12:18:33 PM
From: stockman_scott	Respond to of 65232

Room to Spare: Office Vacancy Rate Soars CFO.com Jan. 14, 2002 No surprise here: In 2001, the U.S. downtown office vacancy rate rose its highest level in four years. The reason? Corporate cutbacks and 9/11, according to property broker Cushman & Wakefield (C&W) The vacancy rate finished at 12 percent for the year, up from 7.1 percent in 2001. The rate was at 10.8 percent at the end of September. But the effects of the terrorist attacks on New York and Washington drove the rate up another 1.2 percentage points, according to C&W. The cities with the biggest increases in downtown office vacancies: San Francisco, Seattle, and Boston, which have large exposures to technology and technology-related companies. The rise in vacancy rates "started with the tech companies and the dot-coms giving up space, and it moved on to financial services and other industries," Maria Sicola, senior managing director of research at Cushman & Wakefield, told Bloomberg. In fact, the wire service notes that in 2001, companies gave up 34 million square feet more than they leased. That's the first time the industry has had "negative absorption" for a year, according to Raymond Torto, head of real estate research firm Torto Wheaton. "Some landlords have resorted to offering free Porsches or South Pacific vacations to brokers who bring them tenants," says Torto in the Bloomberg story. The suburban vacancy rate currently averages 17 percent, up from 15.3 percent in September and 10.4 percent a year earlier. At the same time, the average rental rate in North America is falling. Rents fell 9.1 percent in 2001, according to Bloomberg. What city had the lowest downtown office vacancy rate? Washington D.C, which weighed in with a 6.8 percent rate, up from 3.8 percent a year ago, according to Cushman & Wakefield. Washington was followed by midtown New York, at 8.2 percent, and Houston, 9 percent. Looking ahead, Bloomberg says downtown vacancy rates probably will range from 12 percent to 14 percent for the next two years. It hit the high teens in the early 1990s.