'Flight to Quality' Seen In Office Market

Across the entire market, there was 455,000 sf of positive absorption. And the vacancy rate dropped slightly to 22.36% from 22.74%.

"Much of the positive absorption is still occurring in class A properties, as tenants continue to seek higher quality office space at low rates," the report notes. The Central Business District was stable in the third quarter, according to Ross, absorbing 45,000 sf. The vacancy rate Downtown dropped slightly to 17.7% from 17.9%. "Tenants continue a 'flight to quality,' trend as evidenced by the discrepancy in class A and B property," Ross says. Class A properties show positive absorption of 117,000 sf, while class B properties Downtown were hit by negative absorption of 73,000 sf.

The Southeast Suburban market, the largest submarket in the metro area, showed the most activity in the quarter, according to Ross. Thatmarket boasts 235,000 sf of positive absorption in the third quarter. That contributed to the vacancy rate inching down to 24.53% from 25.38%.

The Northwest market also is moving in the right direction, albeit slowly. Its vacancy rate dipped to 29.2% from 29.5%, "on the heels of 142,000 sf of positive absorption," the report notes.

Ross also notes that 10 office sales were recorded in the third quarter. Prices ranged from $55 per sf to $219 per sf. "Several other properties went under contract during the quarter, but have yet to close," Ross notes.