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TRI-CITIES OFFICE MARKET ENDS YEAR WITH HIGHEST VACANCY LEVEL IN EIGHT YEARS
The Tri-Cities office market ended 2009 in the middle of a serious market correction. While some office markets throughout the Los Angeles Basin have seen a slowdown in the rate of space givebacks, the total vacancy rate continued to increase to 16.8% at the end of Q4. This constitutes
the highest total vacancy rate seen in the Tri-Cities office market since the dot-com bust earlier this decade.
Net absorption was -72,600 SF marking the fifth consecutive quarter of negative net absorption. Weak office demand has resulted in continued downward pressure on average asking rental rates as market-wide rental rates ended the year at $2.77 per square foot, per month Full Service Gross (FSG). Since peaking at $3.13 PSF in Q2 2008, average asking rental rates have declined by nearly 12%. While this seems like a modest decrease from average rental rates seen two years ago, the decline has been more profound in certain submarkets such as Pasadena and among class A buildings.
Despite recent news that the overall economy is growing, market fundamentals in the Tri-Cities office market remain weak with a low level of leasing activity and continued space givebacks as area firms consolidate operations. As a result, it appears that the single digit vacancy levels seen marketwide
just two years ago will not happen again for quite some time.
Contact Michael Soto at 213.532.3220 for more information.
  OFFTRI09Q4.pdf
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