After seeing 39,900 jobs cut in 2008, and an additional 45,000 jobs expected to be lost this year, the office market is struggling to withstand the pressure. Of the jobs slated to be cut by year-end, 19,700 of them are directly in the office-using portion of the city.
To further aggravate the sector, more than 944,000 square feet of office space will be added to the market by the end of December. Additionally, in 2008 913,000 square feet was brought to market.
As a result of the job cuts and new inventory, Marcus & Millichap executives predict a climb in vacancy for the overall market. By the end of the year vacancy is likely to rise 360 basis points to 20.3%, and this comes after a 160 basis point increase in 2008.
The gap between effective rents and asking rents will continue to widen. The report predicts asking rents to hover around $20.76 per square foot while effective rents will continue to drop to $16.13 per square foot. For effective rents this is a 7.4% decrease from the previous year.
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