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Class A, Class B Office Space See Improvement Downtown

March 6,2012

Downtown office space weathered the recession well, dipping below 90% occupancy for a short time. Downtown Class A and B buildings represent 7.3 million square feet of multi-tenant space.  These two classifications represent 97% of the downtown market. Tracking the performance of these two classes gives us a good indicator of office market health and direction.

Class A office space (5.1 million SF) has maintained high occupancy rates and has tightened in recent months to 94%.  This occupancy rate has resulted in asking rents in one building topping $31+/SF plus electricity. 

Class B, while less than half the size of Class A (2.3 million square feet in 20 buildings) has been performing at less than optimal occupancy rates for a number of years.  In 3Q 2011, it bottomed at 77% occupied. Since then, this class has shown significant improvement and currently has an occupancy rate of 85.7%.  Five buildings are 100% leased and nine buildings (representing over 1.1 million SF) have occupancy that exceeds 91%. These are healthy trends that show a strong demand for downtown office space, the anchor of healthy central business districts.