Occupancy rates increased from 86.30% to 86.39% since last quarter, and rental rates decreased from $21.53 per sf at mid-year to $21.29 per sf, according to the Bowers report. Bowers says there have been "significant concessions in free rent, lease assumptions, above standard improvements and escalations."
In addition to what Bowers says is "near record" space availability among owners, "there is still approximately 5 million sf of sublease space on the market."
While he sees "greater activity in the marketplace than many realize, . . . absorption is being offset by space returned to the marketplace."
The leading submarkets in 2002 office absorption are GA 400 North and Midtown, according to the third-quarter report. Five submarkets are experiencing negative absorption. They are Buckhead/Lenox, Downtown, I 285/GA 400, Peachtree Corners, and I 75 North/Marietta.
Despite negative absorption in two of three urban submarkets, Bowers says, "the urban corridor is still doing significantly better at 88.72% occupancy with average rental rates at $24.22 per sf, compared to the suburbs at 85.3% occupancy and $19.92 per sf average rental rates."
Because there will be no additional office deliveries for the remainder of this year, Bowers concludes, "occupancy levels should increase in the fourth-quarter of 2002."
Yet, "although much of the worst is over, a more favorable (owner) office market will not return until the end of 2003 due to ongoing space availability (in both owned space and subleases), weak absorption and an unfavorable general economy."
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