Commercial real estate market holding up

Friday, October 3, 2008 at 3:58am

The Nashville region’s office vacancy rate rose to 12.6 percent in the third quarter, its highest level since late 2004, according to figures released by brokerage CB Richard Ellis.

Office tenants moved in to more than 250,000 square feet of space last quarter, CB noted, with much of it happening in the Brentwood/Cool Springs market. That area has absorbed more than 900,000 square feet so far this year, but CB noted that that number is inflated by the moves of Nissan, Healthways and Verizon from elsewhere in the area.

On the flip side, downtown registered a loss of more than 360,000 square feet, in large part because of those companies moving south.

The big Cool Springs deals also helped push overall office rents higher by about 2 percent from the spring. Since the end of 2006, local average asking lease rates have risen about 10 percent.

Other office submarkets posting leasing gains last quarter were West End/Belle Meade and MetroCenter. The vacancy rates in those markets now stand at 6.0 percent and 3.7 percent, respectively.

In the industrial sector, vacancy rates moved up to 8.2 percent, up from about 6 percent a year ago. The main reason for that was the completion last quarter of two large buildings, one of which is being leased to consumer goods company Vi-Jon.

In a note, CB Managing Director Tom Frye said that, despite the solid-looking numbers, “we are sailing against the strong headwind of international bad news.” But he added that both landlords and brokers say they are still seeing large potential tenants scouting the region.

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