Office-Vacancy Rate Declines,
Propelling Rents 2.1% Higher
by Jennifer S. Forsyth
From The Wall Street Journal Online
July 10, 2006
For the ninth consecutive quarter, the nation's overall office-vacancy rate improved, another sign of a recovery that is allowing landlords to continue to raise rents.
For 72 office markets, the vacancy rate was 13.8% in this year's second quarter, down from 14.2% in the first quarter, according to Reis Inc., a real-estate-research firm. The drop in the vacancy rate allowed landlords to ask for and get more in rents from tenants. Effective rents -- the negotiated price after concessions to tenants -- rose 2.1%, mirroring growth in the previous quarter.
Topping the list in effective-rent growth in the second quarter was New York with 3.9% growth, followed by Orange County, Calif.; Fort Lauderdale, Fla.; Miami; and Austin, Texas, all of which saw rent growth above 3.2%. Best in vacancy rates were: District of Columbia (6.6%), followed by Orange County, New York, suburban Maryland and Miami, all 9% or lower. Phoenix fell out of the top five in both vacancy rate and rent growth over the past three months, but only because its numbers in the first quarter were hard to sustain. The office market there remains strong, said Dan Quan, director of quality control for Reis.
In Miami, the office market has benefited from the condominium craze over the past few years. Relatively few offices were built as developers preferred to use commercial land for housing. Plus, the south Florida office market has been helped by an improving economy, both domestically and in Latin American, said Jubeen Vaghefi, a Miami managing director for Jones Lang LaSalle, a real-estate-services firm.
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