Buying Office Vacancy is Latest Real Estate Trend

The recent trend of buying office vacancy might be a risky one, says the National Real Estate Investor, and buyers and investors are struggling to decide if they should take their chances. Buying office vacancies is essentially betting that job creation will improve, and the future of the economy is still too shaky for everyone to be convinced that buying into the spaces is a smart move. The country’s economy lost 8.6 million jobs in 2008 and 2009. While 1.2 million jobs have since been generated, there is still a long way to go before the job market rebalances. Most new private jobs are in the health care, education, retail and leisure and hospitality sectors—not all places that require substantial amounts of traditional office space.

The Real Deal reported that Manhattan office vacancy rates have finally stabilized, following two months of increases. The average rent per square foot of office space in Manhattan is $43.34, down from $59.60 last month and $61.98 this time last year. However, it’s the high prices in Manhattan that are deterring some buyers, who are now looking at Class-A assets that have high vacancies in other markets, such as Philadelphia, Dallas and Denver. It’s not yet clear if the resurgence in office evaluations will hold, but at least for now, the trend continues.