2007 TYLER OFFICE MARKET SURVEY

The Tyler office market continues its steady improvement with occupancy rates and lease rates increasing to new highs. The total amount of space absorbed since the 2006 Survey was in excess of sixty four thousand square feet, just under the seventy five thousand feet absorbed in the last reporting period.

The annual Burns & Noble Commercial Real Estate Survey shows improvements in all areas of the city as well as in various building classes. The citywide occupancy rate improved to 89.7% while the average lease rate quoted by Landlords jumped to $12.87 per square foot, the highest rate achieved since the inception of the Survey. The rental rates are computed on a gross basis, meaning the Landlord pays all expenses, including utilities.
The improvement in the market is primarily attributable to the strong local economy along with very little increase in the supply of office space. The total amount of vacant space in the City now stands at 215,897 square feet. Only six buildings report having contiguous spaces which contain five thousand square feet or more.

The occupancy rate in South Tyler increased by one percent while the downtown market enjoyed a two percent increase, moving up to 87.5% occupancy. The vacant space available is almost equally divided between the downtown and suburban markets.
Class A buildings continue to enjoy the highest occupancy level, coming in at ninety five percent, while the twenty eight Class B buildings show an occupancy rate of 85.8% and the thirteen Class C structures are 88% occupied. The Survey indicates that only 42,369 square feet of vacant space is still available in Class A buildings.

The higher occupancy rates coupled with greatly increased operating costs and a growing demand for office space in Tyler should result in higher rental rates in the future. Tyler is still well below most markets in office lease rates. The relatively low rates in the local market have made the construction of large multi-story office buildings uneconomical in recent years, but a number of small user occupied buildings have been built, as have several office condominium structures. It is not likely that Tyler will see a large amount of speculative office space constructed in the near future, but some construction will occur in the form of small buildings.

Details of each of the forty nine buildings surveyed are outlined in this report. Additionally, the entire report can be viewed on our company’s website: www.burns-noble.com.

Thanks to all who contributed information for this Survey and to Peggie Jenkins who compiled the data.

Taylor Burns
Managing Partner
Burns & Noble Commercial Real Estate