by Calculated Risk on 4/03/2007 01:47:00 AM

From the WSJ: Office Rents Increase As Demand Stays Cool

Demand for office space in the U.S. remained sluggish in the first quarter ...

And guess what? Even as demand slows, supply is projected to increase as

... developers will open 76 million square feet of new office space by the end of this year.

The current office space absorption rate is about 8 to 10 million square feet per quarter - and will probably slow as the economy slows. But even though demand is slowing, the supply is already in the pipeline, so vacancy rates will most likely rise. That is why I am concerned about the exposure of U.S. banks to commercial real estate.