The shadows that will eventually hit the residential market are starting to show in the commercial market as well. Overall office vacancy in the fourth quarter of 2009 in Los Angeles, Orange, San Bernardino and Riverside counties was 18.5%, a substantial jump from 14.4% a year earlier, according to commercial real estate brokerage Cushman & Wakefield.
Right now, many firms have shrunk but are still renting the same amount of space they had in better economic times.
“All the vacant space out there still doesn’t reflect all the jobs that were lost,” said Whitley Collins, regional managing director of real estate brokerage Jones Lang LaSalle.
Shadow space, as leased but unused space is often called, is impossible to measure accurately, but there is surely enough of it to slow the commercial real estate comeback. Office leasing growth usually lags behind economic recovery by six to nine months, Collins said. A local office market recovery might be as much as 18 months behind the economy now because of shadow space.