For the past two years, vacancy rates have edged downward in U.S. commercial real estate. But so have effective rents, as office-building owners offered prospective tenants concessions and negotiated renewals with sitting tenants at sharply lower rates.
Now, however, rents are firming. REIS Reports Inc., a real estate database firm, reports that its third-quarter survey shows that most of America's biggest metropolitan areas (28 out of 50) are enjoying both falling commercial vacancy rates and rising effective rents for the first time in five years.
So far, the trend is restricted to second-tier cities such as Columbus, Ohio; Fort Lauderdale, Fla.; Salt Lake City; San Antonio; Richmond, Va.; and Tucson--where occupancy rates and rents have both risen at least 3% since the third quarter of 1993. Of the top 10 cities, only Atlanta and Boston made the list of dual gainers.