- It was one of the most active quarters over the last two years for new deals being signed.
- Existing tenants downsizing into new spaces was offset by tenants expanding and new tenants entering the market.
- Call center spaces were the most active industry type.
- Class A rates are declining as a result of sublease spaces reducing rates.
At first glance the office market looked like it was a flat quarter with vacancy holding steady at 20.5 percent. The encouraging aspect is how it overcame a very large amount of space that became vacant. During the quarter over 160,000 square feet of total space was vacated. The biggest loss occurred Downtown where the GAP, Inc. left about 100,000 square feet and moved into almost 75,000 square feet in the North I-25 submarket. Another 40,000 square feet was vacated by UTC Aerospace Systems in the North I-25 submarket. This was offset by 163,200 square feet of new space that was occupied during the quarter. The GAP’s new space accounted for almost half of the positive activity and several medium sized spaces related to call centers made up the balance.
- Consolidations and acquisitions drive vacancy higher
- Investors and owner/occupants have strong appetite to purchase
- Required lease rates in speculative construction delays new starts
After a banner year in 2014 the industrial market stumbled out of the gate as a handful of large available spaces vacated during the quarter. Vacancy increased slightly rising 20 basis points from the fourth quarter of 2014. Just over 100,000 square feet of space became vacant. The primary factor driving vacancy upward was related to consolidations and acquisitions by several national companies.