Office Market – Strong Absorption in Third Quarter 2011

 In California, Commercial, investing, Los Angeles, Ohio

It’s actually not all that surprising given that construction financing has all but shut down once again that any pickup of leasing activity means a net positive absorption given that there’s virtually no new supply coming online.   Plus, given the 20-30% reduction in market rents in many markets since 2008 means that tenants can trade up to better, more efficient or more attractive space and lock in attractive rates for a very long time. 

Vigorous leasing activity helped lower the national vacancy rate to 13.1% from the peak of a year ago.  If leasing activity continues as the level seen this past quarter, we should start seeing some rent increases, since there is so littel new supply coming on market.  CoStar’s analysis found office rents firming or already trending up in some key metros, and more increases are expected to spread across the country by 2013.

“If you know your corporation or group will have a long-term demand for space, there’s never been a better time to sign a 10-year deal,” stated Andrew Florance, Costar Group founder and CEO, who led the presentation Tuesday of the latest quarterly data. “You can feel pretty comfortable, as long as your broker negotiated a reasonable cap on escalation that you’re going to love the rents you’re paying seven years from now.”

And for a little shameless self promotion – I’m here to help with that.  (310) 473-4789 or email me at the ‘contact’ page.

At the link, more analysis from Randyl Drummer at CoStar News

CoStar News – Article – US Office Market Posts Strong Third Quarter Absorption

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