Business Journal: Office Vacancy Up
A challenging economy has created difficult times for owners of office buildings.
Tuesday, October 21, 2008
Sacramento has an empty feeling, at least when it comes to commercial office space. The four-county region’s office vacancy rate was 18 percent during the third quarter for office buildings larger than 5,000 square, that’s the highest rate in at least 16 years, according to industry reports. The credit crunch, the economic slowdown and large office buildings that were recently completed are hurting the market. It’s a much-different situation than two years ago, when landlords controlled negotiations. Now, commercial brokers say the average lease rate dipped a penny to $2 per square foot, the first drop since 2004 – and prices could continue to slide as new office buildings come on the market. Fast-growing suburbs such as Elk Grove and Rocklin are being hurt, but even downtown’s high-rises will have a difficult time finding tenants, especially with new projects soon to be completed on Capitol Mall.