The office vacancy rate plunged by 0.9% to 18.4% during the spring, and rental rates fell to levels more than 7% below those seen last year, according to BD+C Economist Jim Haughey. A number of large office markets, such as New York and San Francisco, saw vacancy levels reach 20%. Overall, net space rentals fell during the spring in every major office market except Pittsburgh.
Developers responded quickly to reduced profit prospects in the office market. Office construction spending expanded through September 2008 but has since declined 16.4% through June. Office project starts declined slowly in early 2009 and then dropped sharply in the last two months, with starts for June-July more than 50% below the average for the previous 18 months. These slow starts shrink the pipeline of work under way and assure a further 6% drop in monthly jobsite spending by next spring.
The 2009-10 office recession will be relatively mild compared to the recession earlier this decade when construction spending dropped 47% over 27 months. This time the expected decline is 22% over 19 months. Recession declines are approximately proportional to the rise in the preceding expansion period. The 2004-08 expansion in office construction was shorter and smaller than the overheated expansion that preceded the previous recession.
The good news is that three market niches show promise of relatively slight declines over the next year. Government office construction, which has so far fared worse than private development, is likely to reverse course when stimulus-funded buildings get started next year. Financial offices, a relatively small niche, appears to be past the worst of its recession, and job site spending has been stable in recent months after a 20% drop last year as a result of forced mergers by the Federal Reserve Bank and the FDIC. Lastly, office renovation projects show promise because they typically decline much less in a recession than does new office construction.
Related Stories
| Aug 11, 2010
Team Tames Impossible Site
Rensselaer Polytechnic Institute, the nation's oldest technology university, has long prided itself on its state-of-the-art design and engineering curriculum. Several years ago, to call attention to its equally estimable media and performing arts programs, RPI commissioned British architect Sir Nicholas Grimshaw to design the Curtis R.
| Aug 11, 2010
Silver Award: Hanna Theatre, Cleveland, Ohio
Between February 1921 and November 1922 five theaters opened along a short stretch of Euclid Avenue in downtown Cleveland, all of them presenting silent movies, legitimate theater, and vaudeville. During the Great Depression, several of the theaters in the unofficial “Playhouse Square” converted to movie theaters, but they all fell into a death spiral after World War II.
| Aug 11, 2010
Biograph Theater
Located in Chicago's Lincoln Park neighborhood, Victory Gardens Theater Company has welcomed up-and-coming playwrights for 33 years. In 2004, the company expanded its campus with the purchase of the Biograph Theater for its new main stage. Built in 1914, the theater was one of the city's oldest remaining neighborhood movie houses, and it was part of Chicago's gangster lore: in 1934, John Dillin...
| Aug 11, 2010
Special Recognition: Triple Bridge Gateway, Port Authority Bus Terminal New York, N.Y.
Judges saw the Triple Bridge Gateway in Midtown Manhattan as more art installation than building project, but they were impressed at how the illuminated ramps and bridges—14 years in the making—turned an ugly intersection into something beautiful. The three bridges span 9th Avenue at the juncture where vehicles emerge from the Lincoln Tunnel heading to the Port Authority of New Yor...
| Aug 11, 2010
World's tallest all-wood residential structure opens in London
At nine stories, the Stadthaus apartment complex in East London is the world’s tallest residential structure constructed entirely in timber and one of the tallest all-wood buildings on the planet. The tower’s structural system consists of cross-laminated timber (CLT) panels pieced together to form load-bearing walls and floors. Even the elevator and stair shafts are constructed of prefabricated CLT.
| Aug 11, 2010
Setting the Green Standard For Community Colleges
“Ohlone College Newark Campus Is the Greenest College in the World!” That bold statement was the official tagline of the festivities surrounding the August 2008 grand opening of Ohlone College's LEED Platinum Newark (Calif.) Center for Health Sciences and Technology. The 130,000-sf, $58 million community college facility stacks up against some of the greenest college buildings in th...
| Aug 11, 2010
School Project Offers Lessons in Construction Realities
Imagine this scenario: You're planning a $32.9 million project involving 112,000 sf of new construction and renovation work, and your job site is an active 32-acre junior-K-to-12 school campus bordered by well-heeled neighbors who are extremely concerned about construction noise and traffic. Add to that the fact that within 30 days of groundbreaking, the general contractor gets canned.
| Aug 11, 2010
CityCenter Takes Experience Design To New Heights
It's early June, in Las Vegas, which means it's very hot, and I am coming to the end of a hardhat tour of the $9.2 billion CityCenter development, a tour that began in the air-conditioned comfort of the project's immense sales center just off the famed Las Vegas Strip and ended on a rooftop overlooking the largest privately funded development in the U.
| Aug 11, 2010
University of Arizona College of Medicine
The hope was that a complete restoration and modernization would bring life back to three neoclassic beauties that formerly served as Phoenix Union High School—but time had not treated them kindly. Built in 1911, one year before Arizona became the country's 48th state, the historic high school buildings endured nearly a century of wear and tear and suffered major water damage and years of...
| Aug 11, 2010
Top of the rock—Observation deck at Rockefeller Center
Opened in 1933, the observation deck at Rockefeller Center was designed to evoke the elegant promenades found on the period's luxury transatlantic liners—only with views of the city's skyline instead of the ocean. In 1986 this cultural landmark was closed to the public and sat unused for almost two decades.