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AVERAGE ASKING RENTS DECLINE FOR THE FIRST TIME IN TWO YEARS
Due to the weakening economy, the total vacancy rate in the San Fernando Valley & Ventura County office market increased nearly two full percentage points to 13.5% in Q2 2008. Asking rental rates decreased for the first time in over two years from $2.55 PSF in Q1 to $2.54 PSF in Q2. While asking rental rates decreased only $0.01 from Q1, it should be noted that the widespread use of landlord concessions and free rent are masking the fact that the decrease in average asking rents is at an early stage with more decreases to come.
At the end of the quarter, construction activity was moderately strong, and 686,200 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 sustained downward pressure on rental rates throughout the remainder of the year.
Contact Michael Soto at 213.532.3220 for more information.
  OFFSFVVC08Q2.pdf
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