Office vacancies are up in much of the West, according to a new survey, with Denver in particular enduring a hefty 20% office vacancy heading into the summer.
The latest figures, using numbers originally compiled by the Census Bureau’s American Community Survey, shows that Los Angeles has a 14.2% office vacancy rate, with Portland at 15.7%.
But the picture also appeared mixed along the East coast, with Brooklyn seeing a vacancy rate of 17.1%, Charlotte at 12.1%, and Miami at 11.8%.
Despite those vacancy challenges, according to the site Commercial Edge, the East is currently witnessing an explosion of new office space construction, with Boston leading the way at 15.1 million square feet, followed by Manhattan at just under 9 million square feet.
Washington, D.C., is also enjoying new office space construction, with 3.8 million square feet underway as of June.
New office construction in the West, meanwhile, is seeing Denver with 2.5 million square feet; followed by Los Angeles at 1.4 million square feet, and Phoenix at just under 1 million square feet.
Office sales price per square feet, meanwhile, have proven fluid in the West this spring. Notes the Construction Edge: Los Angeles has “seen one of the steepest falls in average sales prices across the nation, with the average sale price falling 43% to $237 per square foot from the $412 average price per square recorded last year.”
Denver in the last year has seen an increase from $195 to $233 per square foot, while Phoenix has gone in the other direction, dropping from $314 in 2022 to $210 as of June of this year.
Filling out this regional profile, Construction Edge is also reporting that “San Francisco, San Diego, and the Bay Area led the West, with properties trading at $520 per square foot, $415 per square foot, and $348 per square foot, respectively.”
Providing a rather dire short and longterm picture of the national office rent picture, the analysis company Capital Economics has just released a forecast predicting that an unprecedented 35% decline in office value as an investment will make itself known by the end of 2025.
But even more, the new report by the company contends that an upcoming plunge in office values is “unlikely to be recovered even by 2040.”
By Garry Boulard
