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Columbus, OH - As commercial real estate and the national economy continues to fluctuate, overall vacancy for the Office market increased for the sixth straight quarter. Direct vacancy in total increased 24 basis points to end at 17%. Class A (14.27%) space continues to outperform Class B (19.85%); however, an interesting dynamic took place this past quarter. Class A vacancy decreased while Class B increased as tenants took advantage of concessions offered. This “flight to value” phenomenon points to companies moving out of expensive Class A space into more cost effective office space in Class B properties. This could become a recurring trend as lease terms expire and companies look to cut occupancy costs.
Absorption, which measures in square feet the net gain/loss of space to the available market, was again negative. As somewhat of a silver lining, only 80,000 square feet was added to market availability during the second quarter. About 530,000 square feet of total space was added in 4Q 2009 and 1Q 2010 combined. Distribution of the space was relatively even between the two property classes. Class A gave back 44,200 square feet and Class B followed suit with 35,800 square feet.
Downtown Market Reaches 2007 Vacancy Levels
The Downtown submarket continues its trend of increasing direct vacancy for the third quarter in a row. The second quarter direct vacancy rated ended at 15.01 percent, the highest it has been since the close of 1Q 2007 when vacancy stood at 15.52 percent. Even still, the Central Business District is far from 2004 levels when vacancy was over 18 percent. The CBD peaked in 1Q 2008 when vacancy was 11.98 percent but has struggled to maintain those levels.
About Cassidy Turley
Cassidy Turley is a leading commercial real estate services provider in the U.S., with 420 million square feet of managed space, 58 offices, 19 national markets, and more than $13 billion in completed transactions for 2009. Outside of North America, Cassidy Turley partners with GVA Grimley, the founder and majority shareholder of GVA Worldwide. Cassidy Turley serves owners, investors and occupiers by offering integrated, tailored solutions across a full spectrum of commercial real estate services including capital markets, corporate services (which supports more than 25,000 locations), project leasing, property management, project and development services, and tenant representation. The firm recently ranked in the Top 10 on the Lipsey Co.’s Commercial Real Estate Top Brands Survey. Please visit www.cassidyturley.com for more information about the company.