KUALA LUMPUR: Office occupancy rates in San Diego, in the US have plunged due to unemployment rates of above 10% and falling operating incomes, according to Marcus & Millichap real estate investment services firm.

In a Nov 23 press release on its 4Q2009 Office Research Report, Marcus & Millichap forecast an increase in office space vacancies and declining rentals per sq ft this year despite the significantly reduced size of new office space to be delivered.

According to the firm, vacancy is forecast at 18.6% this year, leaping 340 basis points from 2008 from an average increase of 280.

Furthermore, asking rents are expected to slip 4.8% to US$28.91 (RM..) psf, while effective rents will fall 9.8% to US$23.54 psf, it added.

This is despite builders expecting to deliver 560,000 sq ft of new office space, down from the 1.4 million sq ft completed in 2008 as well as the yearly average of 1.3 million sq ft in deliveries.

Concessions are expected to amount to 18.6% of asking rents, up from 14% at end-2008, said the firm.

“Currently, we are seeing a lot of buyer and seller activity,” said Kent Williams, regional manager of the Diego office of Marcus & Millichap.

The firm predicts 4.1%, or 52,500, of jobs to be slashed in 2009, while office-using employment may drop by 16,500, or 5%.

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