Commercial vacancies stabilize, area in limited recovery
7/20/2010Commercial office rental rates in metro Toledo appear to have stabilized and are showing the first signs of a limited recovery, according to a midyear market overview by CB Richard Ellis/Reichle Klein in Toledo.
A report on industrial space in the region found growing inventory, but stable rental rates with building owners hoping for a turnaround in auto manufacturing, Harlan Reichle, the commercial real estate firm's managing partner, said.
"We have reached - or we're just beyond - the bottom of the cycle. It's not getting worse, and it seems poised to turn the corner," Mr. Reichle said of the region's office space.
Vacancy rates and lease rates have settled over the last six months after dropping sharply from where both were in the first half of 2009. But, Mr. Reichle said the market for office space remains difficult for landlords and great for those leasing space.
Tenants, Mr. Reichle said, are taking advantage of the market weakness by locking in longer lease terms at lower rents. Even tenants with years left on their leases are seeking lease extensions in exchange for rent reductions.
Breaking down the office market by sectors, the region's highest vacancy rates are in older "Class C" buildings in north and east Toledo and Oregon, where 53.5 percent of available space is unrented. In the city's central business district, vacancy rates are at 20.6 percent, with lease rates averaging $14.79 per square foot per year.
Across the entire market and all commercial property classes, the survey put vacancy rates at 16.5 percent for the first half of 2010, and lease rates averaging $15.65 per square foot per year, both up slightly from the end of 2009.
In the industrial market, about 13.1 percent of industrial space was available for rent, the highest rate in 10 years in the metro Toledo area. However, Mr. Reichle noted that several large leases negotiated in the last six months helped ease downward rent pressures and caused rates to remain at about $3.09 per square foot.
In both industrial and commercial sectors, construction of space remains at very low levels.
Contact Larry P. Vellequette at:
lvellequette@theblade.com
or 419-724-6091.