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RENEWALS BOLSTER ACTIVITY LEVELS WHILE TOTAL VACANCY RISES TO 13.3%
The Tri Cities office market showed little sign of recovery with another sequential period of negative net absorption, ending the 1st quarter at -138,600 SF. Net absorption was near flat across most submarkets with the exception of Pasadena which ended the quarter with -145,400 SF, placing a significant
drag on the overall market. Shifting economic sands have had a devastating effect on the Tri Cities office market, as financial and service-related firms downsized space, placing additional pressure on rental rates. Average rental rates ended the quarter down $0.02 to $2.80 PSF. Total vacancy
fared no better, increasing 150 basis points to 13.3%.
While it appears the calamity in the financial markets has subdued, the Tri Cities office market still has to go through hurdles before a constructive recovery may begin. 630,200 SF remains under construction and service firms continue to shed jobs that may lead to further downsizing of space.
Landlords have responded to the economy through aggressive rental cuts and tenant concessions, however, tenant improvements allowances have fallen out of favor in replacement of increases in free rent. Landlords are waging their own battle with debt concerns and maintaining cash reserves through restricting tenant allowances seems to be their best course of action.
Contact Evan Parry at 213.532.3247 for more information.
  OFFTRI09Q1.pdf
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