More commerical vacancies in 3rd quarter '08

More "space available" signs popped up in front of offices, shopping centers and industrial buildings in the third quarter, evidence of the slumping local and national economies.

The combined vacancy rate for all commercial real estate in the Colorado Springs area rose to 9.4 percent from July through September, according to a report issued this week by Turner Commercial Research, a Springs firm that tracks the commercial real estate market. That's up from 9.3 percent in the second quarter and 7.7 percent during the third quarter of 2007.

Rising vacancies are a sure sign of an economic downturn. Businesses that downsize their operations and lay off workers don't need as much space, although some companies benefit because they're able to negotiate lower rents as demand slows for commercial properties.

"Business is in no mood to expand, there is no reasonable money available for investments, unemployment is on the rise, sales and revenue are down and most important, we do not know the cost or time frame of recovery," Paul Turner, head of Turner Commercial Research, said in his report.

Don't expect to see much speculative construction or projects constructed without a firm tenant list, Turner said. Also, retail construction will slow to small additions and expansions of existing shopping centers because of rising unemployment and a decline in consumer purchases, he predicted.

Even so, Turner said, local real estate recovered from past economic downturns, such as the savings and loan industry collapse of the early 1990s that decimated the commercial and residential sectors.

"There is no reason to suspect that we will not recover from this one," he said.
According to Turner's third-quarter report:

• The vacancy rate for Colorado Springs-area office buildings rose to 10.6 percent, up from 10.1 percent in the second quarter and 8.2 percent in the third quarter of 2007.

• Shopping centers had a vacancy rate of 7.9 percent, an increase from 7.4 percent in the second quarter and 7.1 percent in the third quarter of last year.

• The industrial building vacancy rate, including warehouses and manufacturing plants, was 9.2 percent in the third quarter, down from 9.7 percent in the second quarter but up from 7.6 percent in the third quarter of 2007.

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