New office space builds fall well below forecasts
Buffalo Niagara has seen commercial real estate developments put on hold with the recession reducing demand for office space.
Shana Stegner, CB Richard Ellis/Buffalo director of office sales and leasing, has revealed that just130,000 of the estimated 900,000 square feet of planned new office space was been built over last 2 years, representing under one sixth of the predicted level of development.
“The demand for new construction is down,” said Stegner in a commercial real estate market overview, going on to explain that in Buffalo the rate of vacant office space currently stands at 10.6%.
This scenario is also evident in other fields, including retail, investment and industrial. Vacancies increased and planned developments were cancelled or postponed.
“The past half decade took us from one of the most liberal lending periods to one of the toughest economies since the 1930s,” said Robert Starzynski, CB Richard Ellis/Buffalo investment property sales specialist.
This drop in demand has seen an unusual phenomenon: a form of office space ‘upcycling’, fuelled by a variety of incentives from public sector.
This has seen vacant, unused building being refurbished and re-used where in the past they may have been demolished to make way for new developments.
This downturn is mirrored nationwide. The national average for office space vacancies is 17%, higher than New York State.
Other cities have also seen steeper climbs in vacancy rates; Las Vegas has seen an 8% rise from 5% to 13% in the last 24 months on the back off 11 quarters of increasing vacancies.