U.S. downturn leaves office space vacant
Bloomberg News Service
BOSTON — The U.S. office vacancy rate rose in the first quarter to its highest point since 1999 as companies fired workers and gave up space in such cities as San Francisco, Seattle and Boston, according to a study.
Bloomberg News Service
The rate rose to 9.5 percent, from 8.3 percent at the end of 2000, according to Torto Wheaton Research, a unit of CB Richard Ellis Services Inc., the nation's largest property broker. The last time the rate was this high was at the end of 1999.
"For lease" sign such as the one outside the World Trade Center in Los Angeles are becoming a common presence nationwide as companies cut costs and layoffs mount.
The results indicate a slowing economy and mounting job losses are starting to hurt the U.S. real estate market. Companies such as WinStar Communications Inc., Motley Fool Inc. and Yahoo! Inc. have vacated space. Cisco Systems Inc., the No. 1 maker of networking equipment is reassessing its expansion plans after firing 8,000 workers.
"The weakness is across the board," said Ray Torto, a principal of Torto Wheaton. "It's not just limited to the high-tech sector."
Torto said the vacancy rate may rise as high as 11 percent by the end of the year and that rents, after increasing more than 10 percent each of the past three years, will be unchanged this year.
About 11 million square feet of space was vacated in the first three quarters of the year, the largest amount since Torto Wheaton started collecting data in 1988.
Officials at Menlo Park, Calif.-based Spieker Properties Inc., the largest owner of commercial properties on the West Coast, said it typically signs 125 leases a month. In February, it signed 75.
New York recorded the lowest vacancy rate of the 53 metropolitan markets tracked by Torto Wheaton. Its 3.9 percent vacancy rate was up from 2.8 the prior quarter.
The city was followed by San Jose, Calif., Oakland, Calif., Boston and Sacramento, Calif.
