US comanies, struggling to cutcosts, dumped a near-record 25 million square feet of office space in thefirst quarter, driving vacancy up and rents down, according to a report from Reis Inc.
Rusinesses that needed to lease space took advantage of the market weakness to extract concessions from landlords. But the trends exacer bated financial woes for owners, especially those who owe more on their mortagages than their properties' current value.
The office vacancy rat nation wide rose to 15.2% from 14.5% in the previous quarter, and likely will surpass 19.3% over the next year, according to Reis, a New York firm that tracks commercial property. Thait would put the vacancy rate above the level during the real-estate bust of the early 1990s the worst on record.
Effective rents which include free rentr and other landlord concessions, fell 2 % in the first quarter to a national average of $ 24.16, the largest drop since the first quarter of 2002 according to Reis. Sublet space, on average, in going for 10% to 15% less than what landlords are charging.
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