JLL Forecasts 'Moderate Decline' Through '06

The metro-area suburban office market, by contrast, will show a "serious" decline for rent growth and a vacancy rate of 19.7% in 2006.

The Downtown market ended 2003 with a 17.1% vacancy rate, including subleased space, compared with 16.15% in 2001, according to Jones Lang LaSalle's proprietary Regional Economic Growth Index. The direct vacancy rate, which did not include subleased space, was 12.3%.

Last year, Downtown showed 122,000 sf of negative absorption, a big improvement over the 861,000 sf of negative absorption in 2002 and the 2.5 million sf of negative absorption in 2001.

The suburban office market, by contrast, showed a 21.02% vacancy rate in 2003, an improvement over 23.81% in 2002 and 23.5% in 2001. The direct vacancy rate in the suburbs was 17.8% at the end of the year.

The suburban office market had 549,000 sf of negative absorption in 2003, compared with 905,000 sf of negative absorption in 2002 and 836,000 sf in 2001.

As far as the Northwest corridor between Denver and Boulder, the other major submarkets in the region, Jones Lang LaSalle puts its end of the year vacancy rate, including subleased space, at 27.59%. The direct vacancy rate is 24.14%.

One positive sign for the overall market is that the supply of new buildings will be almost non-existent this year. The 90-million-sf market will add only 267,300 sf this year, according to Jones Lang LaSalle. And none of the buildings will be built in major submarkets, such as Downtown or southeast suburban.

Instead, Jones Lang LaSalle is predicting 177,300 sf for the Southwest Suburban corridor and 90,000 sf in the West submarkets.

Next year, Jones Lang LaSalle predicts 1.5 million sf to be built 1.2 million sf in the Southeast Suburban market and 250,000 sf in the CBD.