Boston, MA, Nov. 26--In a sign that commercial real estate markets have begun to stabilize, the national vacancy rate remained unchanged at 16.3% during the third quarter of 2003, according to a recent survey of North American markets by Colliers International, the global commercial real estate firm. This is the first time in ten quarters that national vacancy rates have not increased.
According to the Colliers survey, two major markets reported lower vacancy rates: downtown Boston 17.0% (-1.2) and Central New Jersey 15.2% (-1.1). However, several markets remain soft, including downtown Atlanta 14.2% (+1.2), downtown Dallas 27.2% (+1.3), downtown Houston 21.0% (+1.6), lower Manhattan 14.0% and suburban Philadelphia 17.1% (+1.2).
"There has been some positive economic news, in particular today's revised GDP report, and these kinds of improvements are reflected in the national office market statistics," said Ross Moore, Vice President and Director of Research for Colliers International. "The recovery in the economy seems to be spilling over into the office sector sooner than many people had expected. More than 126,000 new jobs were added in October, and all eyes will be on November's job numbers to continue this improving trend."
Absorption was a relatively healthy 11.8 million square feet, compared to just 1.3 million square feet in the second quarter, marking the second straight quarter of positive absorption. In addition, sublease space now accounts for only 16.4% of vacant space, down from nearly 25% in early 2002.
Despite the stabilizing vacancy and improving absorption rates, it is still a tenants market in terms of rental rates. Downtown rents dipped slightly, down 1.1% nationally, and suburban rates ticked up 0.7%. Previously highflying tech markets recorded further declines with Austin, Boston, San Francisco, San Jose, Seattle and suburban Washington, DC all down over the quarter.
