"Transaction velocity has slowed in the last year, driven by tightened lending guidelines, investor caution and a persistent expectations gap," says Matthew Fitzgerald, Marcus & Millichap regional manager here.
Job losses are expected to double in 2009. Last year the city lost 19,200 jobs, while this year's number is expected to reach 31,000 job losses by the end of December.
To add to the loss in jobs, and therefore the need for office space, roughly 180,000 square feet of office space will enter the market during 2009. This will increase the total inventory by 0.6%.
According to the Marcus & Millichap report, vacancy will continue to rise during the year. It's estimated by year-end the city will have a vacancy rate of 19.1%, which is 230 basis points higher than last year.
While vacancy rises, rental rates will continue to decline. Asking rents will likely be around $18.32 per square foot by year end; but effective rents are estimated to be several dollars lower at $14.01 per square foot. The effective rent number is a 5.6% decline from last year.
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