According to Colliers International, 2,659,684 square feet of commercial sublease space is currently on the market in San Francisco, down a net 61,396 square feet over the past 30 days but driven by withdrawn listings rather than absorption (negative 37,613 square feet).
The percentage of the space available for sublease that is currently vacant has risen from 49 to 55 percent.
∙ San Francisco’s Commercial Sublease Snapshot: September 2009 [SocketSite]
What jumped out to me is how small the San Francisco commercial market is when compared to other parts of the Bay Area, let alone other cities, which makes this information even more disturbing.
More good news for people who love bad news
[Editor’s Note Or simply good data for those who rely on analytics to manage their investments, businesses and planning.]
wait, I don’t understand . . . half of all commercial space in the city is vacant?
that doesn’t seem right
just walking around the streets and entering buildings around the city makes me think I’m not understanding this
if that’s right, how is that not catastrophic?
[Editor’s Note Clarified above, 55 percent of the commercial space available for sublease (not all commercial space) is vacant, up from 49 percent last month.]
^Half of the space for lease is currently vacant.
Rubicon,
OEM is correct. It’s one measure of how quickly prices will fall. Usually a tenant will provide 60 or 90 days notice that they are vacating and the owner will then rerent within that period. Though the new tenant will not always move in right away, the space will be considered rented and not on the market and vacant.
Building owners are a lot like airlines in that they want to fill the seats. During those 90 days before the outgoing tenant leaves, the owners usually survey the market and can get close enough on their asking rent to snag a tenant before the outgoing tenant finally vacates, even in a declining market. When prices are falling faster than the owners realize, the owners won’t be quite so in tune with the market, and so there will be more vacant space for lease.
The amount of vacant space for lease gives you an indication of whether things are getting worse, better or staying the same, but it’s relative to the owners’ expectations. If things are getting worse, but everyone knows it, there won’t be many vacancies because the owners will get ahead of the curve and drop rents in line with their expectations.
However, if you have a situation where headlines indicate that things are getting better, but the reality is such that they are not, vacancies will increase, because the owners’ expectations will not be in line with reality. That’s what’s happening now.
The headlines are all “green shoots” and “the recession is over” but business conditions have not in fact gotten any better. So the owners think things are stabilizing when, in fact, they are not, and the increasing vacancies reflect that disconnect between headlines (and other sources of owner’s beliefs) and reality.
^^ I think you mean half of SUB lease space is avail. Subleased space is a subset of all availabe leased space.
The best is yet to come and babe won’t it beeeeee fine…..
what does sublease mean versus just lease? is it similar to when someone sublets an apartment from another tenant?
Commercial Real Estate lender CAPMARK files for bankruptcy.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aACzaZGHTqxQ
Discussion on CNBC International is that this is only the first big CRE shoe to drop.