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INCREASED ACTIVITY OVERLOOKED BY A SPIKE IN TOTAL VACANCY
The Tri Cities office market deteriorated during the 4th quarter, posting the largest increase in vacancy since 2001. Marked by negative net absorption across all markets, most significantly in Pasadena, a total of (406,300) SF was returned to the market in the 4th quarter. Consequently, the total vacancy increased from 10.4% to 12.4%. Rental rates declined for the fourth straight quarter, ending at $2.82 PSF.
While 2008 concluded on a negative note, 2009 does not look much better. Over 1 million SF of construction is expected to be delivered to the market in 2009 which will cause vacancy rates to continue to rise. Furthermore, rental rates are showing no signs of stabilizing. In prior quarters landlords were able to keep effective rates steady through a consortium of tenant concessions, but more competition of vacant space have broken down average rental rates. A silver lining to all the bad news is a likely increase in net absorption in 2009, as the supply of sublease space begins to
stabilize. The sublet vacancy rate remained unchanged at 1.5%.
Contact Evan Parry at 213.532.3247 for more information.
  OFFTRI08Q4.pdf
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