Real Estate Investor Up Close

By Grubb & Ellis Research: • The market turned around in a big way in the second quarter as measured by vacancy and absorption while construction activity and rental rates continued to move lower – all signs of a nascent recovery. • Vacancy fell by a decisive 30 basis points to 10.6 percent, ending a string of 10 consecutive quarterly increases. While the softening cycle appears to be over, the market remains awash in space with vacancy still 50 basis points above its year-ago level and 300 basis points above its cyclical low of 7.6 percent notched in the second and third quarters of 2007. • Net absorption lunged ahead to 19.2 million square feet, breaking a string of six consecutive quarters in the red. This was the strongest performance since the first quarter of 2008 but still less than half the quarterly totals during the vigorous expansion of 2005 and 2006. • Just 4.5 million square feet of new space was delivered in the second quarter, of which 74 percent was build-to-suit. P

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By Grubb & Ellis Research. The vacancy rate crept higher in the second quarter but just barely, up a mere 10 basis points to 18.0 percent. This ties the all-time record peak in the 24-year history of Grubb & Ellis’ national office database. Previously the vacancy rate hit 18.0 percent in the fourth quarter of 1990 and again in the third quarter of 1991. · Absorption turned positive in the second quarter following eight consecutive quarters in the red. The final tally was 3.9 million square feet – low but mercifully in the black. · Developers completed 5.3 million square feet of new space, the sixth consecutive decline and the lowest rate of new deliveries in nearly five years. Space still in the construction pipeline fell for the eighth consecutive quarter to 20.4 million square feet. This is equivalent to 0.5 percent of the total inventory of office space, which is the lowest such ratio in nearly 15 years. · The average Class A and B asking rental rates for space available at