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The Central Business District (CBD) saw strong demand throughout 2018 and led the market in net absorption recording positive 187,000 square feet. As a result, the vacancy rate fell by 80 basis points (bps) during the quarter to 7.4%. Demand has been more pronounced for high quality space as the combined class A and B vacancy rate fell 90 bps to 8.5%. Correspondingly, lease rates grew saw significant growth. Specifically, class A asking rates surpassed $3.00 per square foot per month of a full service gross basis. Similar market activity is expected for 2019 as demand remains strong and vacant space becomes more difficult to find, especially in Class A buildings and well positioned Class B buildings. There is no new product entering the market in the near term as current rents do not justify speculative construction.

Since the Golden 1 Center completed in the third quarter of 2016, sales activity in the CBD has been very strong. Since that time $760 million dollars of class A and B office have sold as there has been a significant increase in investor activity throughout the area. Increased interest combined with rapidly improving market metrics pushed building values above $300 per square foot for the first time in this economic cycle.

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