"Office buildings across the U.S. lost 1.8 million square feet of occupied space in the quarter, pushing the national office vacancy rate to 17.4%, the highest level since 1993, according to New York-based research firm Reis Inc."

How high do you think these vacancy rates will get? Obviously, this is not the best news for the economy.

Construction Spending has also fallen 8%, due to a drop in commercial construction, according to today's WSJ.

I have seen dropping office rates due to the excessive supply of office units above 2,000 SF in Reno & Sparks.

Rates are typically between $1.05 to $1.55/SF/Month on a full service basis for Class A & B spaces. Even last year there were considerably more owners still looking to get closer to $2.00/SF/Month.

With the motivated landlords reducing their lease rates to obtain cash flow, absorption is starting to slowly increase in our commercial office market.

It has taken about 2 years to get here and owners are either losing their properties, or lowering rent rates (investors are buying these distressed properties for 30% discounts and can thus lower their rent rates to have it CAP out as a reasonable investment).

They kept talking in 2008 about how commercial was going to be the next shoe to drop. Luckily we haven't really seen it as much here in Boston, MA but I shouldn't talk to soon. The recovery has just begun and so far offices haven't been expanding as much what with very little hiring. Once profits are more steady, companies will start to hire more and expand but I'm guessing this won't really get going until Q2 of 2011.