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OFFICE MARKET FUNDAMENTALS REMAIN WEAK BUT RATE OF DECLINE SLOWS
At mid-year 2009, the South Bay office market continued to see weakening fundamentals as leasing activity declined for the fourth consecutive quarter to only 248,500 SF. In addition, the total vacancy rate increased to 16.1% with net absorption of -282,200 SF as tenants continued to give back space either through downsizings, consolidations, or both.
The second quarter also saw the completion of the first few office buildings at the Douglas Park project near the Long Beach Airport. A total of 124,200 SF of new office space was delivered to the market in Q2 with only 24,700 SF currently under construction and expected to be completed in Q3.
Direct average asking rents market-wide decreased from $2.02 per square foot, per month Full Service Gross (FSG) reported in Q1 to $2.00 PSF in Q2. Net absorption, while still negative, was a relative improvement on the -413,900 SF of net absorption seen in Q1. This slowing in the rate of decline in the South Bay office market definitely is reason for optimism, however, whether these numbers constitute a bottoming of the market may be too early to tell.
Contact Michael Soto at 213.532.3220 for more information.
  OFFSB09Q2.pdf
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