San Francisco Office Market Cools in Q3
San Francisco’s scorching office market took a breather during Q3 2007 as both tenants and investors remained cautious due to jitters over the credit crunch and escalating rents. The city posted its 13th straight quarter of positive absorption, which included 120,000 sf absorbed in the central business district. Rent increases dropped slightly, with average rates growing 3.8% in Q3 2007, well below the 16.4% spike seen during the first six months of the year, according to Grubb & Ellis.

Investor Interest in Real Estate Remains Keen
Investors remain keenly interested in commercial property despite credit market volatility and concerns about an economic slowdown. The major limitation to investment activity is a lack of properties coming to market, according to the latest PricewaterhouseCoopers Korpacz Real Estate Investor Survey. The interest is strongest in office, retail and industrial properties, but there are growing concerns about oversupply in the multifamily and hotel sectors.

Chicago Office Rents Rise, Vacancies Drop
The Chicago office is good for landlords, according to data from Cushman & Wakefield, Inc. At the end of Q3 2007, the average asking rent for office space in downtown Chicago was $29.99/sf with class-A towers commanding as much as $36.28/sf. Downtown vacancies have also declined to 13.2% in Q3 2007 from 15.5% a year earlier. Rents have steadily increased, while vacancies have dropped every quarter since 2002, according to Cushman.

Boston Office Market Strengthens in Q2
Boston’s office market has strengthened considerably in Q2, according to brokerage firm reports. The market’s Q2 vacancy rate dropped 100 basis points to 9.6% from Q1, according to Richards Barry Joyce & Partners. The average asking rent for class-A space is now $58.05/sf, up from $47.85/sf in Q1, reported Jones Lang La Salle. Jones Lang further said the market is nearing the peak conditions it achieved in 2000.

Rents Soaring for Office Space in Manhattan
Rents for prime space in Manhattan’s office buildings are soaring, reports Cushman & Wakefield. Average direct rents increased to $107.54/sf in September from $99.11/sf in April at 88 high-end towers that the brokerage surveyed. Douglas Durst has increased the asking rent for remaining space at his One Bryant Park property in midtown to $185/sf after signing deals there earlier this year for $115/sf.

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