Office Volume Down 50% to 91%; Industrial Space at Decade Low; Retail Vacancies at 7.5%
by ilene - August 4th, 2009 3:20 pm
Office Volume Down 50% to 91%; Industrial Space at Decade Low; Retail Vacancies at 7.5%
Courtesy of Mish
Retail, office, and industrial real estate are all suffering to various degrees.
Let’s take a look at all three, courtesy of CoStar, starting with Rapidly Falling Prices Changing Dynamics of Office Leasing, Ownership.
The second quarter of 2009 saw leasing and sales conditions across the U.S. office market plummet at a rate unforeseen in previous analysis by CoStar Group, Inc. In particular, CoStar confirmed that the value of Class A office buildings has declined by 57% compared with prices paid at the peak of the market in 2007.
In addition, office-leasing activity is off 39% from year-ago levels and all but three U.S. office markets posted negative net absorption over the first two quarters of 2009.
“The degree and speed at which these changes in market fundamentals have occurred are staggering,” noted CoStar Group’s President and CEO Andrew C. Florance." Florance noted that, on an inflation-adjusted basis, the average price per square foot buyers paid for office properties had enjoyed an 11-year run-up beginning at the end of 1996 to their peak in the third quarter of 2007. In the past six quarters, U.S. office buildings have lost more than half their value.
The bigger the transaction, the more emphatic has been the sales volume collapse from their peaks. The number of closed office sales of $5 million or less declined an average of 58% from their peaks, while the number of sales involving office properties for $50 million or more have dropped more than 91% from their peak, Florance said.
Industrial Space Demand At Decade Low
Please consider Demand for U.S. Industrial Space Falls to Decade Low.
The industrial vacancy rate rose to 9.8% at the end of the second quarter of this year, while the amount of negative net absorption approached 100 million square feet in the first two quarters of 2009 — both highs for the decade.
Gross leasing of industrial property fell from 97 million square feet in first-quarter 2009 to 83 million square feet in the second three months of 2009 — down nearly 50% from a year earlier — while inflation-adjusted quoted rents continued a retreat that began four years ago.
Among the 20 largest industrial markets in the nation, only two registered positive absorption in 2009, the relatively
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.