The Northern Nevada office market finished the year with three of the four quarters with increased vacancy and negative net absorption for the first time. The second quarter of 2007 represented the only positive in vacancy, but was really a factor of sub-lease space not effecting direct vacancy. Increasing vacancy was the trend for the year when the market included all available space whether it was direct or sub-lease. The total market vacancy increased to 18.5% up from 17.9%. When including the available sub-lease space which continues to increase, the total market has a vacancy factor of 20.4%. The office market and specifically the Class A office market has traditionally been a strong market that was able to sustain the positive absorption even during national economic downturns, yet the net absorption for Class A product in 2007 was a negative 94,190 square feet. The increasing direct space and sub-lease space with the prospect of additional space returning to the market doesn’t present a pretty picture for the coming quarters and potentially all of 2008.

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Comments Off Posted by Lance Faulstich, SIOR, CCIM / Newsletters

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In the third quarter of 2007 the Northern Nevada office market returned to the trend line of ever increasing vacancy. After taking a brief reprieve during the second quarter, the total market vacancy increased to 17.9% from 16.9% last quarter and 17.4% at the beginning of 2007. Sublease space continues to be a thorn in the side and will continue to pose a major threat to the market. The market vacancy would be 19.7% if it were calculated including the available sublease space. The availability of a large amount of direct lease and sublease space coupled with light tenant demand continues to impede the office market. This trend is expected to continue into the second quarter of 2008. Class A office space continues to hold the position as the strongest classification with the lowest vacancy rate. Class A properties finished the quarter with vacancy rising to 12.4% from 11.7% at the end of the last quarter. Although Class A remains strong in direct vacancy the group has the highest percentage difference in vacancy including sublease space. The classification vacancy would increase over three percentage points when calculating all space currently on the market for both lease and sublease. Value tenants and tenants retracting from Class A suites helped reduce the vacancy in Class B office product. Overall vacancy in Class B dropped slightly to finish at 22.9% down from 24.7% and was very minimally impacted by sublease availabilities. Class B vacancy with sub-lease space included would only increase to 24.1%. Garden product remained statistically flat at 22.3% and 22.5% with sublease space included in the third quarter.

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Comments Off Posted by Tom Reid / Newsletters