Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Office vacancies hit 16-year highs

By David Ellis, CNNMoney.com staff writer


NEW YORK (CNNMoney.com) -- Office vacancy rates are now at their highest level in 16 years, according to a report published Monday, as elevated unemployment levels across the country continue to temper the demand for space.

Roughly 700 million square feet, or 17.2%, of the more than 4 billion of available office space nationwide was unoccupied as of the end of March, according to the real estate research firm Reis. The last time office vacancies were this high was in 1994.

The number of empty offices has been on the rise since the start of 2008, as soaring unemployment and a wave of business failures have crushed commercial real estate.

The trend however, has not just been isolated to those parts of the country that have been particularly hard hit by the recession.

In fact, nearly three-quarters of the country's major metropolitan areas experienced an increase in office vacancies in the first quarter of 2010.

The city of Detroit has the highest office vacancy rate. Mired by troubles within the automotive industry, just over a quarter of all of the office space in the metropolitan region now sits empty, according to Reis.

Washington, D.C. boasts the lowest vacancy rate, with just 10.4% of all office space vacant as of the end of March.

Office rents, another widely-watched indicator of the health of the real estate market, continued to decline, falling 0.8% in the quarter.

California's Orange County and New York City saw the biggest decline in rents so far this year, falling 2.3% and 2.1% respectively.

One positive development: The data indicates that businesses are paying closer in rent to what landlords are asking for, suggesting that landlords are not making as many concessions as they used to.

Still, analysts at Reis noted that rents and the level of office vacancies are unlikely to improve until sometime next year, given that commercial real estate typically lags what is happening in the broader economy.

"We expect less of a bloodbath in fundamentals in 2010 versus 2009, but rents will still decline and vacancies will still continue to rise," Victor Calanog, Reis' director of research said in a statement. To top of page

Index Last Change % Change
Dow 17,689.86 -56.12 -0.32%
Nasdaq 5,128.28 -0.50 -0.01%
S&P 500 2,103.84 -4.79 -0.23%
Treasuries 2.20 -0.06 -2.78%
Data as of 5:06am ET
Company Price Change % Change
Bank of America Corp... 17.88 -0.25 -1.38%
Micron Technology In... 18.51 -1.39 -6.98%
Facebook Inc 94.01 -1.20 -1.26%
Apple Inc 121.30 -1.07 -0.87%
Frontier Communicati... 4.72 0.09 1.94%
Data as of Jul 31
Sponsors

Sections

Some families are outraged at the sums they've been offered by Lufthansa as compensation for the Germanwings plane crash in March which killed 150 people. More

Fast-food chains that operate in more than 30 locations nationwide are the sole target of a new rule in New York to hike their minimum wage to $15. But consumers and small business owners, as well as some employees, may be the ones to pay the price. More

You can't blame it on the economy anymore. More Millennials now have jobs, but are still living at home. More