Office Space Is Emptying Out

Wall Street Journal (10/03/08) P. A2; Frangos, Alex
Reis Inc. reports that rents on U.S. office properties--including landlord concessions and discounts--were flat in this year's third quarter, the worst result for office-property owners since commercial real estate started to pull out of a prolonged slump near the end of 2004. The office market in suburban areas and smaller cities has been on the decline throughout the year; and now such previously immune, large metropolitan areas as San Francisco and Boston are experiencing vacancy-rate increases. Of the 79 markets that Reis tracks, vacancy rates increased in 66 and rents declined or were flat in 40. For the third consecutive quarter, businesses emptied more space than they took nationwide. In total, approximately 18 million square feet of space were vacated--the most since the first quarter of 2002.