Vacancy rates for office space in 128 north are increasing. According to CoStar research, vacancy rates dipped in 2006-2007 into the 13% range. They're now forecasting vacancy rates up to 16% as more space comes on the market with pending job layoffs. The vacancy rate has not increased more drastically because tenants have not started giving up space to their landlords as they hold out to see when the recession will end and to see whether they'll need space to rehire staff.
According to CoStar Research:
Boston has 2.3M SF in additional inventory in Q1 2009
Boston has 2.1M SF of negative net absorption by Q1 2009.
Note: Tenants are trying to hold out for a more tenant friendly marketplace. Companies are struggling to understand their direction and are delaying on space decisions. They also don’t want to [...]
The battlefield is quiet. Buyers have retreated and sellers have dug in. There's chatter in the trenches. "They'll come to us when they're ready," the sellers banter. "They can't hold out forever. Eventually they'll need a property and will come knocking on our doors for what we've got." They feel proud of what they own, but inside they're nervous because they know they can't hold on forever. The supplies are bound to run out.
"You've finally capitulated, haven't you?" joked my business partner. He and I laugh at the fact that he's a bear and I'm a bull. It works for us. And when either of us become too negative or positive on the market, we weigh the pros and cons. "Yep." I said. "Despite the fact that you know that I'm a bull and that I've been writing and advising of this correction for some time now, I really feel that I've experienced the shift today. There's no going back now."A lot of equity's going to be lost.
Thursday, May 28, 2009
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