by Calculated Risk on 4/20/2008 04:17:00 PM

From Financial Week: Big rise seen in unoccupied office space

According to the real estate services firm Grubb & Ellis, first-quarter office vacancies rose to an average 13.6% nationally, up from 13% in the previous three quarters.

“With demand turning negative at the same time that the construction pipeline will deliver the 94 million square feet still underway, vacancy is expected to peak at 18% by the end of 2009,” Grubb & Ellis economist Robert Bach wrote in a research note ...

The recession’s impact on employee levels “is just getting started, so the office market is reacting pretty quickly and I would suspect that it will rise to a vacancy rate of 15% to 16% by year end.”

As I mentioned earlier, this week I was driving along the 405 freeway in Orange County at sunset - the sun was shinning at the perfect angle through the buildings - and I was amazed at how many of the new office buildings have no tenants; See-through buildings - reminiscent of the '80s.

The CRE slump has arrived.