That's not to say tenants no longer control terms of negotiation. Citywide rents ranged from a rock bottom $5 per sf (for some class B space in the far northwest submarket) to $32 per sf (quoted for some class B space in the CBD) and an average of $20.31 per sf. A year ago, the range was $8 per sf to $36.23 per sf with an average of $24.29 per sf.
In many cases, the wider array of choices for tenants has lengthened the search process including the decision-making portion as prospective tenants wait for what they hope will be the best deal. Bob Hemphill of Republic Properties says the time brokers spend on deals has nearly doubled to 90 or 100 hours. "And not all of them go through," he says.
It's not only the abundance of space that's slowing tenants down, Hemphill says. Some are worried about their businesses and want to wait for positive economic signals for the economy before they commit to a new lease.
The CBD and the far northwest were among the six submarkets in which vacancies declined. The CBD ended the year with a 21.2% vacancy rate, down from 23.9% in the third quarter and the far northwest closed 2002 with a 34% rate. That was the city's highest vacancy rate, but it notched down from 34.2%. The southwest submarket posted a 20.9% vacancy rate, down from 22.1% in the third quarter.
The northwest was the only major submarket in the city to show a higher vacancy rate. Properties were 17.9% empty, up from 17.6% in September 2002. Its highest vacancy rate was the 18.9% reached in the 2002 first quarter.
While more space was occupied at the end of 2002, the city's office inventory also was higher. About 27.8 million sf of office space had tenants in December 2002, up from 23.7 million sf at the end of 2001 as developers delivered 6.9 million sf during the year. The year-to-year vacancy rate comparison was 23% in 2002 and 18.8% in 2001.
Sublease space continued to weigh on the market with 2.9 million sf vacant at the end of 2002, up from 2.3 million sf a year earlier.
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