Effective rates, however, when adjusted to include free rent and increased tenant improvements, "are typically 10% to 20% less than the asking rates," the researchers report. While they expect asking rates to remain relatively stable, they say free rent and other incentives will continue to erode effective rental rates.
The third-quarter vacancy rate actually decreased a mere 0.6 point compared with second quarter, due primarily to a single 90,000-sf lease by Excel, Inc.
Nevertheless, the current vacancy rate is up from 19.5% in third-quarter 2001.
"The amount of space being added to the market by way of corporate downsizing is continuing to wreak havoc on an already excessively high vacancy rate market," say CBRE staffers.
Class-A properties are 18.4% vacant, and class-B properties are 26.1% vacant.
Vacant sublease space comprises 2.1% of the total suburban market, or 9.9% of the vacant space.
Meanwhile, the amount of office space currently under construction is down 84% from the same period a year ago. A 24,000-sf building was completed during third quarter 2002, and another 65,000-sf property is expected to come to market by year-end. Currently, these buildings do not have any pre-committed tenants.
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