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It’s a favorable time to be a tenant. The standard signs of a weakening market—rising vacancies from tenants giving back space and lower rents—made a dramatic appearance this quarter. The City posted 766,464 square feet of negative absorption (or, net change in occupied space) during the fourth quarter, bringing the year’s total to 589,805 negative square feet. This is the largest quarterly loss since the fourth quarter of 2001.
Negative absorption, coupled with over one million square feet of new supply added this quarter, increased the City’s overall vacancy rate to 12.6 percent, from 10.5 percent.
This increase in vacancy, compounded by less demand resulting from the downturn of the economy, produced a drop in rental rates across the board. Over the quarter, Financial District class A weighted effective rents dropped 24.1 percent, posting an average of $42.64 per square foot.
Contact Tove Nilsen at 415.288.7827 for more information.
  Q4 2008- The_Knowledge_Report_for_email.pdf
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