Fancy that--Vacant buildings on the rise

It's kind of funny that after I posted a continuation of my rant about losing Atlanta history in favor of development, the Sunday biz section of The Atlanta Journal Constitution printed this article: (please forgive me for not knowing how to do a cut)THE 2003 ECONOMY: REAL ESTATE: PR execs get pick of places for officeLeon Stafford - StaffSunday, December 28, 2003When Bob Cohn, Jim Overstreet and Amy Parrish decided to open a public relations firm earlier this year, they needed office space in a hurry. Such need is a poor bargaining chip in the world of lease negotiations, but it wasn't a problem for the firm. In today's commercial real estate market, Cohn, Overstreet & Parrish had the upper hand. "When we were looking, agents were throwing amenities at us right and left," Overstreet said, ticking off such perks as deals on parking, utilities and cleaning services. "They were giving away property." And that is looking to be the case in 2004, said John Zintak, vice president at Carter, an Atlanta commercial real estate firm. There will be a moderate recovery next year, he said, but the surplus space is too large to be reversed in one year. After looking at space at three or four different buildings, Cohn, Overstreet & Parrish settled for Midtown Heights on Spring Street, which gave the fledgling company free furniture. Mark Pettit, president and chief executive of Creaxion, another Atlanta public relations firm, said he gets at least one call a week soliciting his interest in moving his company from Buckhead's Atlanta Financial Center. He was even cornered at a recent holiday party by an agent offering space for $12 a square foot. That's a marked change from Creaxion's first search for space in 1999, when it had just three employees. "It was the other way around then," he said. "The landlords were in charge." Creaxion has grown to 12 employees and has enlarged its space three times, all while watching its neighbors move out. "I think what they see in us is a steady business," Pettit said. And if the Financial Center wants to keep Creaxion, Pettit wants more than just a more competitive lease. "I want our name on the sign." Vacancy rates on riseVacancy rates have been creeping upward all year, reaching roughly 17 percent, reports Torto Wheaton Research.What demand there is for space seems to have been coming from smaller tenants, who account for more than half of all leased office space, according to a Prudential Financial report.That is consistent with signs, while tentative, that small businesses are leading the economic expansion, Prudential reports. "The recovery in tenant demand that we expected in the second half of 2003 has not yet materialized."About 31 million square feet of office space in metro Atlanta was empty at midyear. That's a vacancy rate of nearly 25 percent, the worst since 1992, according to Cushman & Wakefield. More than 63 million square feet --- 14.5 percent of the total --- of industrial space was vacant, according to Cushman & Wakefield. Federal Reserve economists have predicted a pickup in commercial real estate next year. However, Economy.com estimates it will take at least a year for the national vacancy rate to dip to its 10-year average of 13 percent.--- Michael E. Kanell