Vacancy Rates

"Empty," says Jack Rodman, an expert in distressed real estate, as he points from the window of his 40th-floor office toward a silver-skinned prism rising out of the Beijing skyline. "Beautiful building, but not a single tenant. "Completely empty. "Empty." So goes the refrain as his finger skips from building to building, each flashier than the next, and few of them more than barely occupied.

Hoping to keep its 119 rooms filled, Hotel Erwin on Venice Beach is offering an unusual promotion for its countercultural clientele: an Ink and Stay package that includes $100 toward a tattoo and a bottle of tequila to numb the pain. Down the coast at the Hard Rock Hotel in San Diego, guests who get the Hard Rock and a Hog deal can roll through the All-American City on a Harley Davidson motorcycle that comes complimentary with a two-night stay. But for hotel perks, it's hard to beat the deal offered at the Four Seasons Hotel in Beverly Hills, where your stay comes with a free rental of a Mercedes, Porsche or BMW convertible.

Los Angeles office landlords will probably be forced to slash rents as much as 30% in the first half of the year as job cuts create more empty space, Grubb & Ellis Co. said Wednesday. Office vacancy rates in Los Angeles County jumped to 12.2% at the end of 2008 from 9.7% a year earlier, the Santa Ana broker said. "Southern California counties got caught in the economic whirlwinds of 2008, and there will be little or no letup in 2009," said Jack Kyser, an economist who worked on the report.

For California shopping centers, this week's bankruptcy filing by the Mervyns department store chain threatens to become another big headache. Mall owners are already struggling with store closures, forcing them to keep a lid on rents or even reduce them in some cases, retail experts say. Now Mervyns says it will consider closing some locations, which would further weaken the retail rental market.

In a sign that the economic slowdown is affecting Southern California businesses, the rents on office space are down slightly over last year, and vacancy rates are up. In some parts of the region, office buildings that once housed mortgage lenders and other housing-related businesses stand 20% empty, according to brokerage Cushman & Wakefield.

More U.S. apartments stood vacant last year as higher rents, low mortgage rates and Americans' preference for home ownership drove down demand, according to a report by Reis Inc., a New York-based research firm. The city of Los Angeles and Orange County, however, had the nation's second- and third-lowest vacancy rates, the report said. The vacancy rate in the 79 largest U.S. metropolitan markets rose to 5.9% from 5.7% a year earlier, the highest since 2004, Reis said. Rents rose 4.

Office vacancy in Los Angeles County continued to shrink during the fourth quarter, a sign that the local economy is growing steadily as white-collar businesses expand and add workers, according to data released Tuesday. "This economy has been sustaining itself and looks like it will remain strong," said Joe Vargas of Cushman & Wakefield, the real estate brokerage that compiled the data. "Job growth will continue to eat away at office vacancy." The county's overall vacancy rate was 10.

Renters in Southern California may be getting some relief, with landlords lowering their asking rents and offering move-in incentives amid signs that the apartment market is softening. Average vacancy rates at major apartment complexes rose in most Southern California markets during the fourth quarter while the rate of annualized rent increases slowed in many locales, according to data being released today by RealFacts, a Novato, Calif.-based research firm.

If there's a house in your neighborhood that's been for sale for a while, there's a good chance that nobody's home. The number of unoccupied houses around the country has jumped sharply in the last year, according to government figures. For more than a decade, vacancy rates for so-called homeowner housing (as opposed to properties intended to be rentals) have held steady at about 1.7%, but they crept up to 2.1% in 2006. They're at a record 2.

The U.S. office vacancy rate in the second quarter fell to its lowest level in nearly six years, reflecting a paucity of property, real estate research firm Reis Inc. said. Despite an additional 11.9 million square feet of office space added to the market, the second-quarter U.S. vacancy rate fell to 12.7% from 13.1% in the first quarter, Reis said.