But when the ''available space'' -- which includes space high-tech and telecommunications companies once thought they could fill is included, the vacancy rate rises to 42%, according to the report prepared by brokers Doug Bakke, Frank Kelley and Lindsay Guagnini.
The market didn't see the increase in subleased space in the fourth quarter of last year that it saw in the two previous two quarters, but the market continues to suffer and the ''damage was already done,'' the report notes.
''Once a leading example of the ''new economy,'' this area is now filled with ''see-throughs'' as you drive along US 36,'' the report says. ''As the last few buildings under construction reach completion, they stand vacant, anxiously awaiting new Northwest tenant activity.''
There's still about 900,000 sf of subleased space on the market, although some of it has reverted back to the landlord, such as with Global Commerce Systems and XO Communications in the Mountain View Corporate Center, CB Richard Ellis says.
The report goes on to say that rates have dropped by 25% to 40% and up to 12 months of free rent on a five-year lease can be found.
Tenant improvement allowances have increased to $30 to $33 per sf from the standard $25 per sf. And brokerage commissions have been raised to $5 to $6 per sf from $3. Additional incentives often are added to sweeten the commissions.
On the bright side, tenants are scouting more than 600,000 sf for subleased or direct vacant space.
These tenants include engineering firms, title companies, oil and gas companies and telecommunication companies. The are expected to be much more diversified and less likely to crash as it did before.
''Assuming the majority of these deals are consummated in the first quarter, they will provide momentum toward a gradual recovery,'' according to the CB Richard Ellis report.
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