Commercial Real Estate

Image of commercial office

​Vacancy Rates and the Economy


The recession greatly increased commercial office building vacancy rates. After the recession, that percentage dipped significantly. Commercial real estate also indicates a regional economy’s health. Expanding economies and high-performing companies will decrease vacancy rates and raise rents. Conversely, rents fall and vacancies rise during a recession. (Source: UOP CBPR Index)

This graph shows the percent of vacant office buildings in the Stockton and Modesto markets. Vacancy rates have fallen in each quarter since Q3 2013, reaching only 7.8% in Q3 2016. This reflects the commercial market’s continued economic recovery. (Source: UOP CBPR Index & Costar reports)

This graph shows annual asking office rental price per square foot in Stockton and Modesto. Unlike vacancy rates, rental rates have fluctuated since 2013 and have decreased 1.1% since Q1 2012. Rental rates are more sensitive to changing market conditions and economic outlook. Property managers most likely decrease rent to avoid vacancy, which might explain temporary rental price declines while vacancy rates also declined since 2013. (Source: UOP CBPR Index & Costar reports)


This graph displays annual retail building rental price per square foot in Stockton and Modesto. Unlike office and industrial rates, retail rental rates decreased between 2012 and 2015. When cities plan new residential development, retail buildings likely follow more so than other commercial real estate. Retail building stock upticks could contribute to rental prices. (Source: UOP CBPR Index & Costar reports)

This graph reveals quarterly retail building vacancy rates for Stockton and Modesto. Of the three building types (office, industrial, retail) retail vacancy rates were most constant, although they have decreased 1.5% since 2012. (Source: UOP CBPR Index & Costar reports)