As we get to the end of another year, it is time to reflect on what happened in the office real estate market in 2006 and what we can look forward to in 2007.
In looking back over the past year the Macon and Middle Georgia office market is not unlike the national office market. According to Integra Realty Resources, the overall national office market vacancy rate is approx. 14.1%, while the overall vacancy rate for the Macon and Middle Ga area at the end of 2006 was 17% for the suburban office market and 16% for the downtown office market.
So let’s take a more in depth look at what happened in the office market in 2006.
DOWNTOWN MARKET
If you remember last year we had a new office building open in the downtown market for the first time in over 20 years. When the building opened there was a concern could the market absorb an additional 120,000 square feet of office space. The market proved that we could as good portion of the space vacated by the tenants that moved into the Gateway Plaza building was absorbed by tenants who moved into the downtown area.
As I stated last year the downtown vacancy would probably remain in the upper teens, however we were fortunate to have that figure drop to the middle teens at about 16%. That was due to the fact that Georgia College and State University has leased the space vacated by the US Atty’s in the Thomas Jefferson Building for their masters degree program. Also, several of the larger buildings downtown were able to absorb some of their vacancies to help reduce the overall vacancy rate.
The main focus for the Downtown office market in 2006 was to concentrate on the leasing the existing office space and that has happened to certain degree. Again, in 2007 the main focus for the downtown office market is for the owners to concentrate on the lease up of the existing buildings to get higher occupancies and to enhance the income stream of their buildings.
SUBURBAN MARKET
The suburban office market again remained soft through out the year. The year started with a vacancy rate of approx. 16% and finished the year at 17%. This was due to the fact that two of the class A buildings had several tenants leave their buildings, however a majority of that vacancy loss was made up by the lease up of the vacant space in the Perimeter Crossing Office building on Riverside and also space in several of the class b projects.
The small office building market remains strong as more and more tenants want ot own their own building as opposed to leasing.
As with the downtown market the main goal for 2007 should be the lease up the existing vacant space and concentrate on lowering the vacancy rates down to a lower double digit fugure.
Donnie Laurens
Commercial Real Estate Agent
Macon Commercial Office
478-746-9421