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Economic Slowdown Affecting Absorption Rates

SAN DIEGO-Many tenants have postponed expansion plans in light of an unsettled stock market and concern over the energy crisis, prompting the lowest absorption rates seen in the county in 10 years, according to a new report.

By Randyl J. Drummer | Updated on April 20, 2001

SAN DIEGO-Office leasing plummeted to just 62,200 sf in the first quarter of the year, with many tenants postponing expansion plans in light of an unsettled stock market and concern over the energy crisis, according to a survey by Burnham Real Estate Services.

But the office market remains in good balance with a vacancy rate of just 7.4%, up only slightly from 6.5% at the end of 2000, and the slowdown appears to be temporary, according to San Diego-based Burnham.

The net absorption is the lowest since 1991, when a net 243,000 sf was leased all year. However, the market of the early 1990s was overbuilt and Burnham expects the fundamentals to remain stronger during the current cycle.

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