Q3 Report: CBD Office Availability Hits 9.3%

PORTLAND-Office vacancies continued to rise in the third quarter while rents continued to fall, according to the latest report from Cushman & Wakefield.

Availability in the Central Business District is at 9.3% while the tech-heavy Suburban market eclipsed 16%. In the second quarter, the rates were 7.8% and 14.5%, respectively. The Suburban market’s lowest vacancy rate in the recent past came in the third quarter of 2000, when it stood at 8%. The CBD market saw its lowest availability rate in the fourth quarter of that year, when it stood at 4.6%.

C&W’s Portland Managing Director Terry Shanley tells GlobeSt.com that neither market likely has hit bottom, as dot-coms continue to throw space back on the market as they die or retreat under the pressure of the struggling economy. “It’s still the same story,” says Shanley. “I suspect the fourth quarter will show an additional rise.”

Available sublease space in both markets rose sharply in the third quarter, according to the report. The amount of sublease space available in the CBD market grew by 73% from the second quarter to the third and now stands at 427,123 sf. The Suburban sublease market grew by 46% to 570,162 sf. Direct availabilities in both markets grew less than 10% in the third quarter; the CBD now has 1.21 million sf directly available compared to the Suburban market’s 1.87 million sf.

In response to the rise in vacancies, rents are falling. Average class A office rents have fallen from $24.11 per sf in the first quarter to $23.63 in the third. Average class B and C rents, meanwhile, peaked in the second quarter at $21.31 and $17.77, respectively, before falling in the third, to $20.96 and $17.54, respectively.