Why is there so much vacant commercial real estate?

[Felix Sharpe]

Hi BP,

I'm preparing to close on my first deal, an owner-occupied duplex.  With this one almost done, I'm looking to forward to finding the next opportunity.  I believe that may come in the form of commercial office space. That leads me to my question - WHY IS THERE SO MUCH VACANT COMMERCIAL OFFICE SPACE? I'm starting to notice it everywhere.

In downtown Louisville, there are several prime spots that are vacant in highly visible/heavily foot-trafficked areas of downtown - namely Main and Market Street. If anyone has any theories, please do share. @Clay Smith @Brett K. @Chuck B.

Thanks,

Felix

[Chuck B.]

@Felix Sharpe - I've always thought that anything outside of class-A prime areas could sit empty for what seemed like ridiculously long periods. The great thing about commercial though is that once leased it can stay leased for many, many years if you're lucky.  If it's a really desirable area it won't be empty for long though.  e.g. look at Nulu, Crescent Hill, parts of Bardstown Road, etc.  Even when newer businesses are failing rapidly, it doesn't take long for a new one to take over in one of these areas.  Rents are outrageous and nothing stays empty for long on the main strips.

This is one of the reasons I really like residential property... easy, fast lease up!  Commercial though can rent for much more and be a lot more hands off.  

Our old residence is available for commercial lease right now (it's zoned for offices or residential, one of the things that originally drew me to it) and I've recently dropped the price to $9.20 a sq foot to entice some more interest.  Really hot areas might rent for something more like $14 to $20 a sq foot.  East Broadway is definitely not a "super hot" area but I think it could be in 24 months or so when all of the new development is done.   http://www.kcrea.com/listing/29785335 Find me a small law firm looking for impressive digs and I'll make it worth your while!  :)

Best,
 - Chuck