Newspaper article THE JOURNAL RECORD

Downtown Reversal Lifts Vacancy Rates

Newspaper article THE JOURNAL RECORD

Downtown Reversal Lifts Vacancy Rates

Article excerpt

Downtown's office vacancy rate rose to almost 30 percent in the third quarter of this year while suburban vacancies stayed low, according to a study by CB Commercial Real Estate Group.

Overall metro office vacancies rose for the second straight quarter to 15.85 percent from 15.44 percent in the second quarter, though it remained below the third quarter 1996 vacancy rate of 16.1 percent. The city is home to 13.8 million square feet of office space -- 2.1 million square feet of that unfilled. The downtown market accounted for 70.84 percent of the city's vacant space.

Small- and medium-sized business expansion has helped the city maintain relatively low vacancies, said Katie Riesen, office properties associate at CB Commercial. Because suburban markets are tightening and most of the vacancies are downtown, businesses may look to the area again. But the lower quality of Class B and C office properties downtown and problems with parking will prevent a surge in the area. "Some people might move downtown, maybe smaller users with 1,000 to 2,000 square feet, but not the major users," she said. "They still need to be out there where parking is not a big cost." The downtown market, with 5.2 million rentable square feet, has 1.5 million square feet of empty space. Its 29.87 percent vacancy rate grew from 28.12 percent in the second quarter, marking the region's highest rate since the fourth quarter of 1995 and its first quarterly increase since September 1996. With OG&E's gradual move out of Corporate Tower and renovations planned for the First National Center, about 700,000 square feet of downtown office space will come on the market by 1999. That could result in a drop in rental rates, which range from $7 to $13 per square foot with a weighted average rate of $9.86 per square foot. The city's rental rate average is $10.24, up from $10.01 in the second quarter. Metro Class A space has a weighted average asking rental rate of $15.50, ranging from $13.50 to $17.50 per square foot. For Class B space, the average asking rental rate is $12.50 per square foot, ranging from $10 to $13. …

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