A key measure in real estate, a decrease in net absorption means that more commercial real estate space is becoming vacant than is being leased. Positive net absorption signals the opposite.
A new Colliers market report put the overall vacancy rate for the Dayton office market in the fourth quarter of 2024 at 18.3%, up from 18.1% in the third quarter of 2024, but down from the 23.3% posted in the final quarter of 2023.
Net absorption was put at negative 23,700 square feet in the fourth quarter of 2024, compared to negative 6,100 square feet in the third quarter of the year. Net absorption in the fourth quarter of 2023 was a positive number, 93,800 square feet, Colliers said.
The market’s “overall inventory was reduced to 14.9 million square feet from 15 million square feet at the end of 2023, reflecting the removal of office properties slated for conversion into residential, hospitality, or other uses,” Colliers said.
That data set change “significantly impacted” the vacancy rate.
“Despite no new supply being added during the year, the market saw a positive absorption trend, totaling 53,413 square feet for 2024,” the firm said.
The downtown area saw some of the biggest challenges, the report found. The Central Business District’s vacancy rate increased slightly to 28.7% in the fourth quarter of 2024 from 28.2% in the prior quarter, Colliers said.
Class A properties in the downtown Central Business District experienced the highest vacancy rates, reaching 42.9%.
Hybrid work
Cristian Arenas, a Cincinnati-based research analyst with Colliers, said Dayton is affected by many of the same trends affecting most cities — hybrid work remains a factor and suburban markets often tend to be stronger than downtown markets.
“Dayton is not like a very active market,” Arenas said. “Usually you would see a lot of activity very close to the base.”
“It’s not that it’s bad,” he added, referring to Dayton. “It’s different.”
Wright-Patterson Air Force Base, with some 38,000 military and civilian employees, is the state of Ohio’s largest concentration of employment in a single location.
With the incoming Donald Trump administration, if there are greater investments in military and defense spending, that might be reflected in stronger leasing activity near the base in coming months and years, Arenas also said.
For the Central Business District, negative net absorption of 27,133 square feet in the fourth quarter last year contributed to an annual total of negative 48,075 square feet, “reflecting continued tenant outflows,” the firm said.
Suburban markets outperformed the Central Business District, benefiting “from consistent demand and comparatively lower vacancy rates,” the report said.
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