Businesses Take Less Office Space Nationwide

Wall Street Journal (07/03/08) P. A2; Frangos, Alex
A new Reis Inc. report shows that companies are leasing less office space nationwide, limiting growth in office rents to just 0.7 percent in this year's second quarter to $25.16 per square foot--the slowest pace since 2005's second quarter, when the U.S. office sector was in the early stages of emerging from a five-year slump. For the second consecutive quarter, businesses vacated more offices than they took; and the national vacancy rate rose to 13 percent from 12.8 percent in the first quarter. Some tenants are delaying leasing decisions as rents continue to decline, while others are shying away from making long-term commitments with the economy so unsteady. Reeling from the housing boom going bust, Atlanta and Sacramento are among the worst-hit areas; while more and more suburban office buildings are feeling the effects of soaring gas prices as companies avoid locating in places that require staff to drive long distances.