Commercial

Image of officeThe recession greatly increased commercial office building vacancy rates. After the recession, that percentage has decreased significantly. Commercial real estate also indicates a regional economy’s health and activity. Expanding economies and high-performing companies will create lower vacancy rates and higher rents. Conversely, rents fall and vacancies increase during a recession. Commercial real estate construction can reflect future economic growth. (Source: UOP Index).



This graph shows the quarterly percentage of vacant office buildings in the Stockton and Modesto markets. Vacancy rates have fallen in each quarter since Q3 2013, reaching only 7.8% in Q3 2016. This reflects the commercial market’s continued economic recovery (Source: UOP CBPR Index & Costar reports).

This graph shows annual asking office rental price per square foot in Stockton and Modesto. Unlike vacancy rates, rental rates have fluctuated since 2013. Rental rates have decreased by 1.1% since Q1 2012. Rental rates are more sensitive to changing market conditions and economic outlook. Property managers most likely decrease rent to avoid vacancy, which might explain temporary rental price declines while vacancy rates also declined since 2013 (Source: UOP CBPR Index & Costar reports).


This graph displays annual retail building rental price per square foot in the Stockton and Modesto markets. Unlike those of office and industrial buildings, retail rental rates decreased between 2012 and 2015. When cities plan new residential development, retail buildings more likely follow than other commercial real estate. Retail building stock upticks could contribute to rental prices (Source: UOP CBPR Index & Costar reports).

This graph reveals quarterly retail building vacancy rates for Stockton and Modesto. Of the three building types, retail vacancy rates were the most constant, although they have decreased by 1.5% total since 2012 (Source: UOP CBPR Index & Costar reports).