Office vacancies edge lower, starts surge.

Staff

Offices became the most attractive market to commercial real estate investors late in 2006 and will hold that position for at least another year. The demand for office space is expanding faster than supply in most major markets. The national vacancy rate fell to 15% in the first quarter of 2007 from 16% a year earlier. As a result, office rental rates are up nearly 6% in the past year with a similar rise projected for the coming year.

Completion of new office space will increase sharply following a surge of new starts from about a year ago. Reed Constr