And what do they really mean to CFO's, Presidents, Entrepreneurs and Business People searching for Commercial Real Estate in Connecticut, Office Space in New Haven, or any Real Estate in Connecticut?

Vacancy Rate refers to the percentage of the total square footage of all the existing buildings in a particular geography, for instance, New Haven County. The total square footage of all the square footage of all the buildings in the geography for each type of Commercial Space is calculated, whether Office, Warehouse or the like. Then the vacancy in each category is totaled and divided, the result is the vacancy rate, or percentage of total Rentable Square Footage Available.

In practical terms, rates, though they are derived from hard numbers, are malleable. Recently one published report stated that New Haven County's Industrial Market has a 23% vacancy rate, yet it is very hard to find good leasable Industrial Space for Tenants. So what does that number mean? It means: if the vacancy rate is 23%, our economy is in trouble, and it's a Tenants' and Buyers' Market. Clearly it's neither of those and space is hard to find, so what it means is not a lot, unless it's clear what the parameters produced 23%

Net Absorption is simply how much space was leased for a given sector over the previous year, or quarter, or five years. The ,""Net Absorption,"" of ,""Class A,"" Office Space in New Haven's ,""CBD,"" refers to the amount of the best available office space in the ,""Central Business District,"" (read The New Haven Green and the Ninth Square) of New Haven was leased or otherwise taken off the market. In the case of New Haven, ,""otherwise taken off the market,"" is worth study because so much former office space has been converted to apartments, downtown lofts, and condos that it has affected the Rate and makes it look as though the New Haven Office Market is Booming.

Jargon and Numbers in the Commercial Real Estate Market can be massaged to paint just about any picture, just as they can be on a national level with the Standard & Poor's, or any other Index. It doesn't matter, whether it's New Haven, Connecticut, Memphis, Chicago or New York City. While they are a measure of our economy and a bell weather of change, take them with a grain of salt

February 1, 2006

Archive