9/21/2009

Some measures of economic activity, showing that this hasn't been the worst recession, let alone the worst depression



Both office and retail vacancies have been higher during each previous recession.

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3 Comments:

Blogger Mark said...

Talk to any commercial real estate investor and see if they think we've seen anywhere near lows in occupancy. I think most will tell you that we have yet to see the low in occupancy rates.

9/21/2009 11:05 AM  
Blogger Mark said...

The worst is yet to come...

9/21/2009 11:06 AM  
Blogger AnonymousDoe said...

John,

According to Wikipedia, the last recession began on March 2001 and ended on November 2001. However the office vacancy rate didn't peak until early 2004. The previous recession began July 1990 and ended on March 1991. However, the office vacancy rate peaked in 1988 and didn't drop again 2002. There was no recession in 1984, but there was a huge spike in the office vacancy rate at the end of that year.

I don't see much of a correlation between recessions and office vacancy rates. Overbuilding is an important factor in determining office vacancy and not just the state of the economy. Another important factor is office rents which are clearly are on the decline. Lower rents will typically push down vacancy rates. In addition, because of office space is typically leased for the long time, companies that are reducing their head counts still have to pay for space that the committed to back in 2005-2007.

Regardless, the current recession, which began in December 2007, hasn't ended and it is very unclear when the office vacancy rate will peak this time around.

9/21/2009 2:20 PM  

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