SOURCE:

Wall Street Journal Online

Demand for office space dropped for

the first time since the economy emerged from its downturn earlier in the

decade, according to first-quarter data from Reis Inc., a
New York research firm. Reis's data is compiled using the 79 largest office markets.

Vacant office space nationwide has increased to 12.8% from 12.6% in the previous quarter. This is still considerably below the 16.9% rate it hit in 2003 after the technology bust. The feeling is that it isn't expected to get near that rate this time as developers haven't been building nearly as much new space.

There are some bright spots out there though. "The energy markets are booming," says Ric Clark, chief executive of office company Brookfield Properties. Houston topped the list of 79 markets that Reis surveys in terms of rent growth, up 3.5% last quarter. Denver, Tulsa and Oklahoma City also fared well.

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