September 10, 2001—Grubb & Ellis Company, one of the largest commercial real estate firms in the US, has released findings from its second quarterly study of the telecom real estate market, which includes statistics on total market size, vacancy rates, and rental rates. Telecommunications real estate facilities were defined as buildings in excess of 20,000 square feet with at least 75 percent of their space allocated for telecom, data center, carrier hotel, or co-location facility usage.
Findings included:
- Telecom vacancy levels dropped to 38.9 percent in the second quarter from 44.6 percent in the first quarter. Vacancy rates exceed 30 percent in most major markets, indicating there is still a large surplus of inventory waiting to be absorbed. By comparison, the nation’s office and industrial vacancy rates were 11.5 and 6.7 percent respectively for the second quarter.
- An additional 5.4 million feet of telecom space is under construction, with only 18.5 percent of it pre-leased.
- Another 6.4 million feet is planned, but will be difficult to rationalize unless metropolitan vacancy rates fall below 10 percent.
- Substantial amounts of sublease space were returned to market as many companies declared bankruptcy and others downsized and tried to sublease their space to conserve cash.
An executive summary of the comprehensive research for the first and second quarter 2001 is available at the Grubb & Ellis Telecom Group Web site.
