The News: Deliveries, Shrinking Labor Market Will Swell Vacancy
- Jan 06, 2009
Developers are slated to deliver a significant amount of office space in 2009, just as the economy paints a continuing painful employment picture. Those factors will combine to increase the nationwide office vacancy rate, according to Grubb & Ellis Co.’s Global Real Estate Forecast.Total payroll job losses will reach 1 million to 2 million for 2009, gross domestic product falling 1 percent, predicted Grubb & Ellis senior vice president & chief economist Robert Bach. Additionally, much of the 90 million-square-foot pipeline of office projects will hit the market this year. Thus Grubb & Ellis forecasts 45 million square feet of negative absorption by year-end and a substantial rise in sublease space. The firm expects vacancy to increase to 16.5 percent, 2 percent higher than at year-end 2008. The growing amount of sublease space will also exert downward pressure on rents, predicted to decline 4 to 5 percent.All eyes are on Washington, D.C., as Congress and President-elect Barack Obama’s team crafts legislation to jolt the economy from its slumber, and that city’s office market rates at the top of Grubb & Ellis’ Investment Opportunity Monitor, owing to the expansion of the government to enable it to deal with the faltering economy. Three Texas markets also made the list for their strong population growth, and other top-10 metropolitan areas boast natural barriers to entry, according to Grubb & Ellis. The entire list:1. Washington, D.C.2. Portland, Ore.3. Los Angeles4. San Francisco5. Austin6. Dallas-Fort Worth7. Houston8. Raleigh-Durham, N.C.9. Boston10. Oakland, Calif.