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CB COMMERCIAL REAL ESTATE GROUP RELEASES FIRST QUARTER 1992 COMMERCIAL VACANCY RATES

 CB COMMERCIAL REAL ESTATE GROUP
 RELEASES FIRST QUARTER 1992 COMMERCIAL VACANCY RATES
 Downtown Office Vacancy Rate Rises, Suburban Unchanged;
 Industrial Rate at 8.6 Percent, Up from 7.9 Percent
 LOS ANGELES, May 11 /PRNewswire/ -- Commercial real estate vacancy rates, released by CB Commercial Real Estate Group Inc., for the first quarter of 1992 showed the downtown office vacancy rate at 18.8 percent, up from 18.1 percent at 1991 year-end and up from 17.4 percent from the 1991 first quarter. The suburban office vacancy rate was at 19.7 percent, unchanged from the 1991 fourth quarter and down from 20.2 percent in the year-ago first quarter. Metropolitan office vacancy rates, which combine the downtown and suburban figures, were 19.6 percent for the 1992 first quarter, 19.4 percent for 1991 year-end and 19.4 percent for last year's first quarter. The recent trends of rising downtown vacancy rates and slowly declining suburban rates are continuing.
 The industrial space vacancy rate rose decisively in the first quarter to 8.6 percent, compared with 7.9 percent at 1991 year-end and 7.5 percent in the 1991 first quarter.
 The information was compiled by CB Commercial Real Estate Group Inc. and analyzed by Raymond G. Torto, Ph.D., principal of CB Commercial Torto Wheaton Research, Boston, a subsidiary of the multimarket commercial realty company.
 Office buildings
 "While other sectors of the economy are debating whether a recovery has started or not, the office space market is still clearly in the doldrums," Torto commented, adding, "Many of the indicators of market activity are showing signs of poor performance. This is continuing to be true with first quarter results on vacancy rates and net absorption."
 Total net absorption (the change in the total of occupied square feet) was 3.4 million square feet. This is the lowest quarterly level of net absorption since mid-1990, when the current recession began, and is just 10 percent of the level of the second quarter of 1987. Compared with past levels, downtown absorption was relatively strong in the first quarter. The "collapse" of absorption was primarily in the suburbs. The highest quarterly level of net absorption recorded in the suburbs during the last five years was 22 million square feet.
 Since there is no evidence that the recession is disproportionately affecting the suburbs, the question may be asked: Why is there an uptick in downtown absorption and a concurrent decline in suburban absorption? A possible answer is that the high level of vacancies is feeding demand for bargain rents. This has already occurred in the suburbs, where there is now declining vacancy and firming rents. On the other hand, vacancy is rising in downtown areas, rents are still falling and tenant demand for bargains is being met.
 Also, gross activity is at a high level. CB Commercial offices in many parts of the United States report that tenants are moving to take advantage of the market. The following table shows square footage of net absorption by region, including downtown vs. suburban figures. Note that the Southwest has had a decline of 1.8 million square feet in occupied space, while the Pacific Coast led all regions with a gain of 2.3 million square feet. The impacts of the recession and market adjustments are widely disparate.
 Office Net Absorption by Region
 1992 First Quarter (million square feet)
 Metro Downtown Suburban
 Nationwide 3.41 2.23 1.18
 Northeast (0.39) 0.01 (0.38)
 Mideast .97 0.52 0.45
 North Central-East .74 0.63 0.11
 North Central-West .67 0.29 0.38
 Southeast (.15) (0.17) 0.02
 Southwest (1.87) (0.88) (0.98)
 Mountain 1.12 0.14 0.98
 Pacific 2.3 1.7 0.62
 The net absorption figures by metropolitan areas are illustrative of the varied conditions around the country. More metro areas (32) had positive absorption than negative (21), and clearly the figures show that some downtown areas are relatively healthy. Examples are:
 Net Absorption in 1992
 First Quarter (square feet)
 Downtown Areas
 Boston 370,700
 Detroit 640,400
 Los Angeles 1,300,000
 Sacramento, Calif. 352,100
 Washington, D.C. 664,700
 Suburban markets with strong net absorption are:
 Net Absorption in 1992
 First Quarter (square feet)
 Suburban Areas
 Denver 470,700
 Houston 515,800
 Minneapolis-St. Paul 423,800
 Phoenix 282,100
 San Francisco 265,900
 San Jose, Calif. 278,200
 Washington, D.C. 454,900
 Markets with significant changes in vacancy rates, compared with the 1991 fourth quarter are:
 Downtown
 Increases + pct. Decreases - pct.
 Sacramento 6.7 Fresno, Calif. 3.0
 Las Vegas 4.2 Albuquerque, N.M. 2.1
 Dallas 3.0 Oakland, Calif. 1.3
 Minneapolis- Indianapolis 1.2
 St. Paul 2.5
 Ft. Lauderdale, Fla. 2.3
 Suburbs
 Increases + pct. Decreases - pct.
 Fresno, Calif. 2.4 San Jose 1.6
 Austin, Texas 2.0 Indianapolis 1.6
 Mid-New Jersey 1.1 Minneapolis-
 Westchester, N.Y. 1.1 St. Paul 1.5
 Ft. Worth- Salt Lake City 1.4
 Arlington, Texas 0.9 Tucson, Ariz. 1.3
 Industrial property
 At 8.6 percent, the Industrial Vacancy Index has marked both its highest level and its largest quarterly increase since its inception in 1981. At the regional level, the weakness in the current industrial market seemed most evident in the Midwest and the West where availability of space increased 0.8 percent and 0.9 percent, respectively. While there were increases in the East and South, they were comparatively mild at 0.4 percent and 0.1 percent, respectively. Regional data, including the recent trends, were as follows:
 Increase (Decrease) of Industrial Space Availability (Percent)
 March December March
 1992 1991 1991
 Region
 East 9.2 8.8 8.2
 Midwest 7.6 6.8 6.6
 South 8.4 8.3 7.8
 West 9.3 8.5 7.8
 An analysis of first quarter data suggests that of the 36 markets covered by the index, exactly half saw increases in availability while five were unchanged and 13 had declines. The highest availability rate was in Northern New Jersey, at 15.3 percent, followed by 14.9 percent in the Phoenix area. The lowest availability rate during the first quarter was in St. Louis, which had 1.6 percent. St. Louis has been resisting the trend for almost three years and continues to do better than most markets despite the bleak economy.
 Some Eastern and Southern markets, such as Boston and Orlando, Fla., seem to have already bottomed out and begin to show signs of recovery. On the other hand, the Midwestern and Western markets continue their descent. Two markets experiencing increases of nearly two percentage points were Philadelphia (1.9 pct.) and Chicago (1.8 pct.). Chicago's rate has advanced from 6.9 percent at the end of 1989 and 9.4 percent at the end of 1990 to 12.1 percent in the most recent quarter. Southern California, the largest market covered by the increase, had availability of 11.1 percent for the first quarter, compared with 10.0 percent at 1991 year-end.
 Following were the largest decreases noted in the Industrial Index at Dec. 31, 1991:
 Percent Vacant at
 March 31, Dec. 31, Percent
 1992 1991 Net Decrease
 Orlando 7.4 8.9 1.5
 Charlotte, N.C. 5.9 7.1 1.2
 Tampa, Fla. 4.2 5.3 1.1
 Northern New Jersey 15.3 16.3 1.0
 Jacksonville, Fla. 3.6 4.5 0.9
 Westchester, N.Y. 11.2 12.1 0.9
 The largest increases in vacant industrial space were:
 Percent Vacant at
 March 31, Dec. 31, Percent
 1992 1991 Net Increase
 Philadelphia 10.2 8.3 1.9
 Chicago 12.1 10.3 1.8
 Atlanta 12.3 10.9 1.4
 Northern and Central
 California 10.4 9.1 1.3
 Cincinnati 5.7 4.5 1.2
 Metropolitan areas with the highest and lowest availability rates as of March 31, 1992, are:
 Highest Percent Lowest Percent
 Northern New Jersey 15.3 St. Louis 1.6
 Phoenix 14.9 Seattle 3.2
 Atlanta 12.3 Nashville, Tenn. 3.2
 Chicago 12.1 Washington, D.C. 3.6
 Mid-New Jersey 11.5 Jacksonville 3.6
 -0- 5/11/92
 /CONTACT: Raymond Torto of CB Commercial Torto Wheaton Research, 617-345-0011; or CB Commercial News Bureau, 800-366-0771/ CO: CB Commercial Real Estate Group Inc. ST: California IN: CST SU:


DM-JL -- LA005 -- 8450 05/11/92 09:06 EDT
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