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VACANCY RATE INCREASES FOR THE THIRD QUARTER
IN A ROW; RENTAL-RATE GROWTH FLAT
The slowing economy in Q1 2008 caused occupied office space in the San
Fernando Valley & Ventura County market to shrink by 297,500 SF. This
was the third quarter in a row of negative net absorption.
Vacancy rates climbed to 11.7%, up nearly a full percentage point from
last quarter. Asking rental rates remain the same from last quarter and
were still up 9.0% year-over-year. However, most of the recent increases
in rental rates occurred early in 2007 with rental-rate growth markedly
slowing since then.
At the end of the quarter, construction activity was moderately strong,
and 1.0 million SF was underway. As this space comes on-line over the next
two quarters, vacancy rates are projected to climb by another one to two
percentage points, tilting the market even more in favor of the tenant.
With the slowdown in the economy causing many firms to reevaluate their
space needs, combined with the delivery of new office space, expect significant
downward pressure on rental rates throughout the remainder of 2008.
Contact Michael Soto at 213.532.3220 for more information.
  OFFSFVVC08Q1.pdf
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