by Calculated Risk on 11/13/2008 07:09:00 PM

This is a story that is playing out everywhere ...


Click on graph for larger image in new window.

Credit: Greg Cross, The Bulletin.

This graph from The Bulletin shows the office and industrial vacancy rates in Bend, Oregon. The office vacancy rate has doubled from last year and has almost tripled from the low in Q1 2007.

From Jeff McDonald at The Bulletin: More offices empty as demand goes soft

The vacancy rate in Bend’s office market more than doubled from third quarter 2007 to third quarter 2008, to 17.1 percent ... The vacancy rate is the highest in at least 15 years, said Darren Powderly, a Bend-based broker for Compass Commercial Real Estate Services ...

[T]he spike in demand for office space that occurred during the boom years between 2004 and 2006 resulted in a glut of new office buildings that appeared on the market this year — just as demand levels waned with the economic downturn ...

The good news is very little building is planned for 2009, so vacancy rates are expected to flatten in Redmond and Bend, Powderly said.

This happened in many places across the country - demand for offices increased with the housing bubble, developers responded by building new office buildings (and industrial buildings, malls and hotels) and now demand is waning just as the new buildings are coming on line.

The "good news" in the article is that "little building is planned for 2009". That is also happening everywhere, and while less building might be good news for building owners, it also means a significant decline in non-residential investment in 2009.