First, she looked at absorption. The market needs to have 78.28 million sf of occupied space for a 90%-occupancy rate, she notes. That means, overall, another 8.7 million sf needs to be absorbed across the entire market. For class A and B space to reach a 10% vacancy rate, only 7.45 million sf needs to be absorbed.

Hewitt took the average amount of space absorbed from 1992 through 2005, which is 1.34 million sf per year for all space, and 1.02 million sf for class A and B space. When she crunches the numbers, she comes to 6.5 years for the overall market to fall from about 17% vacant to 10%, and 7.3 years for class A and B space to reach equilibrium.

However, the market will reach equilibrium much faster using historic job-growth numbers, she points out. From 1992 to 2005, the metro area created an average of 22,671 jobs per year. And 20,992 of which took class A and class B office space, Hewitt notes.

If, on average, each new job requires a conservative 100 sf per employee, that equates to 3.8 years to reach equilibrium for all space and 3.6 years for class B space.

Which scenario is more accurate? Only time will tell, Hewitt noted. But she does expect the metro-area commercial market to really fly in 2007.

"We'll be fueling up in 2006," Hewitt said, displaying a photo of a rocket with '07 painted on it at a recent C&W forecast meeting. "And we will reach nano speed in 2007. I'm calling it Nano07."

Instant Insights /

C&W's Hewitt Offers Two Scenarios for Office Market Equilibrium

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