Down but not overbuilt
The office construction market may be entering a "down" part of the cycle, but it is doing so when there's little evidence of overbuilding — in contrast to the market's condition entering the last recession. According to Property & Portfolio Research Inc., nationwide vacancy rates for class A and B office space rose from 9.6 percent during the third quarter of 2000 to 11.8 percent in this year's July to September period.
But the firm believes that the bulk of the deterioration has already taken place and that vacancies should peak at about 14 percent late next year or in early 2003 — a vacancy rate well below the 20 percent-plus level that prevailed for a number of years early in the past decade. Although office building construction activity will lose ground over the next few years, the bottom will not drop out and the center will hold, meaning that there will still be plenty of opportunities for members of the building team in the right place with the right project.