Occupancy rates climb

Real Estate Weekly, March 23, 1994

Overall U.S. office occupancy figures rose 0.8 percent, from 80.9 percent at year-end 1992 to 81.7 percent at year-end 1993, according to a survey of North American office markets released today by the Building Owners and Managers Association (BOMA) International.

This figure represents a return to the 1991 U.S. occupancy rate.

"All property types experienced positive net absorption during the third and fourth quarters of 1993, with vacancy rates stabilizing in the face of little or no construction activity," said Thomas B. McChesney, president of BOMA International. "Tenants in older buildings are upgrading to take advantage of favorable lease economics in newer buildings. Class C tenants are moving up to Class B space, and Class B tenants are ascending to Class A space. In many cities and suburbs around the country, the supply of Class A space is tightening, even if rents have not yet begun to rise very much."

The Year-End 1993 North American Office Market Review summarizes occupancy data on 43 United States markets, representing 2.3 billion square feet of office space, and 7 Canadian markets. Overall, Canadian occupancy was 82.9 percent, slightly higher than the U.S. but down 0.7 percent from the year-end 1992 occupancy rate of 83.6 percent.

The occupancy rate for the U.S. downtown sector was 81.6 percent, up 1.1 percent from year-end 1992, and the suburban sector was 81.9 percent, up 0.8 percent from last year.

Other trends discussed in the review are financing, lease concessions, primary sources of capital, leasing activity and bright spots in the market.

The occupancy rate for the Canadian downtown sector was 83 percent, down 1.6 percent from last year, and the suburban sector was 82.8 percent, up 1.1 percent from year-end 1992.