Transition Year

The office vacancy rate is nearing its peak for this cycle, but the market will remain soft in 2010, according to Josh Scoville, director of strategic research for PPR, a CoStar Group company.

The office vacancy rate is nearing its peak for this cycle, but the market will remain soft in 2010. Absorption surprised on the upside in the fourth quarter as office-using employment grew for the first time in nearly two years and at its fastest pace since the first quarter of 2007, but vacancies remain elevated in most markets. Despite the uptick in absorption, business confidence and investment remains shaky, and companies are unlikely to begin hiring and taking down office space en masse until the economic recovery solidifies. As a result, 2010 will be more of a transition year for office than a blockbuster one.

Look for more on office absorption from Josh Scoville, director of strategic research for PPR, a CoStar Group company, and other market and economic/demograpic data, coming soon in the March issue of CPE.