The vacancy rate for Class A office space, typically in newer buildings, decreased to 13.2 percent in July from 16.2 percent in January, according to a new survey by Michael S. Clapp of Michael S. Clapp & Associates Inc.
The vacancy rate in Class B office space remained about the same. Vacancies for Class B office space, typically in older buildings, decreased slightly to 25.1 percent in July, compared with 25.2 percent in January.
Clapp said that vacancies in both categories were driven in part by Republic Mortgage Insurance Co.'s move during the reporting period to the Park Building at 101 N. Cherry St. from the north submarket near Hanes Mill Road.
"They moved out of B space so it increased the B vacancy or kept it high," Clapp said. "Then they moved into A space, and it decreased the A vacancies there."
He also said that some former single-tenant buildings have been added to the survey since they went on the market as multi-tenant buildings.
The overall vacancy rate for office buildings increased slightly to 19.3 percent in July compared with 19.1 percent in January.
The asking price for rent in Class A space decreased 5 cents to $19.64 a square foot. This is the second consecutive reporting period that Class A rents have decreased.
The asking price for rent in for Class B space rose 51 cents a square foot to $13.88 in July.
Clapp said that the increase in the Class B rent was most likely the result of an increase in the asking price in the 400,000-square-foot University Corporate Center at 1100 Reynolds Blvd. The rate went from $13 a square foot to $16. Also, the addition of the 105,723-square-foot 475 Corporate Square building, with an asking price of $16.50 a square foot, raised the overall rate.
The north submarket had the highest vacancy rate in July, at 29.6 percent, followed by the downtown submarket at 17.1 percent and the west submarket at 11 percent. The overall average asking price rose 20 cents to $16.68 a square foot in July from $16.48 in January.
Clapp said he doesn't expect much change over the next six months, but expects some weakening in the market if there is a recession and a rise in unemployment.
Still, there is some "good-quality A space" available, the Park Building and the Wachovia Center at 100 N. Main St., he said.
"I think those are excellent values in the marketplace, and they would be the kind of space that would be absorbed over the next six months," Clapp said.
■ Fran Daniel can be reached at 727-7366 or at fdaniel@wsjournal.com.
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