BOMA report finds occupancies drop in '92.

A survey of North American office markets released today by the Building Owners and Managers Association (BOMA) International shows that overall office occupancy rates in the U.S. declined from 81.7 percent in 1991 to 80.9 percent at year-end 1992.

A summary of the survey results has been published in the Year-End 1992 North American Office Market Review. The 46-city survey represents more than two billion square feet of office space in the United States and Canada.

"Increasing vacancy and declining absorption rates continue to plague major markets across the United States and Canada, however we are seeing slight improvements in some markets," said Stephen P. Hokanson, RPA, CPM, president of BOMA International. "Even so, we do not anticipate major improvements in most markets until 1995.

"If employment projections by leading economists are correct, we could see more than one million new office jobs created by 1997, which could mean the absorption of over 40 percent of current vacant space within the next five years," stated Hokanson.

During 1992, many of the same pressures from 1991 faced the North American office market: tenant retention, attracting new tenants, oversupply, tight credit, and corporate downsizings. Class A space continues to do well, drawing tenants from Class B buildings at rates that Class B buildings were charging just a few years ago.

Older stock and problem properties are being "mothballed", and down the road others will be domolished. Even with new construction at a standstill, with the exception of medical facilities and some build-to-suits, there is no real absorption.

The occupancy rate for the U.S. downtown sector was 80.5 percent and the U.S. suburban sector was 81.1 percent. The city with the highest occupancy was Anchorage (91.4 percent), followed by Portland (85.9 percent) and Sacramento (85.8 percent).