by Calculated Risk on 2/20/2009 04:42:00 PM

“The dramatic deterioration in the fundamentals of the space market, especially over the last three quarters, has been especially swift and severe.”
Lloyd Lynford, chief executive officer of Reis.

From Bloomberg: U.S. Office Vacancy Rate to Climb to 16.7%, Reis Says

The vacancy rate at U.S. office buildings will rise to 16.7 percent this year and could reach an 18-year high [in 2010] as tenants cut jobs and try to sublet space, property research firm Reis Inc. said.

The net amount of space leased will fall by 47.8 million square feet this year, one of the steepest drops in occupied space on record ... Next year, the vacancy rate for U.S. office properties could rise to 17.6 percent, the highest since 18.7 percent in 1992 during the last major slump in commercial real estate following the savings and loan crisis ...

Click on graph for larger image in new window.

This graph shows the actual office vacancy rates and the Reis forecast for 2009 (assumed steady increase over four quarters for graph). The office vacancy rate was 14.5% in Q4 2008.

The office vacancy rate peaked at 17% in 2003 following the bursting of the stock market bubble, and peaked at 19.1% in 1991 following the S&L crisis (the data series starts in 1991).