SALEM — At 11 Keewaydin Drive stands the shell of a large office building that has remained unfinished for more than a year.
In some ways, it's the symbol of a trend worrying many town planners, economic forecasters and real estate experts. Commercial vacancy rates are rising, and "for lease" signs litter the town's commercial districts, but developers are still putting up office buildings at breakneck speed.
Brooks Properties, which owns the unfinished building at 11 Keewaydin, isn't going to complete the structure until it has a tenant. And, even though no tenant has appeared, Brooks is planning to build three more structures in the same neighborhood.
Three miles away, SFC Engineering is designing a medical office building on Sally Sweets Way. And in Londonderry, Tower Hill Developments plans to expand an office building at the corner of Route 28 and Enterprise Way.
"It's kind of interesting that now we've got proposals for ... more buildings when we've got vacant space," said Ross Moldoff, planning director in Salem.
Salem has an office-space vacancy rate of 22.2 percent, according to Mike Harrington, managing broker for the Manchester office of economic forecaster CB Richard Ellis New England. That's up from 16.6 percent vacancy in 2006, and 16.8 percent vacancy in 2005, according to CB Richard Ellis.
All of those rates are higher than an average, healthy rental market, Harrington said.
"Once we break 10 percent (it's an unbalanced market). So, if you're around 9 to 8 percent vacancy, we really consider that to be a market in which you'd expect to have building," Harrington said.
Other communities nearby are doing better. Derry has a vacancy rate of 8.5 percent and Londonderry has a rate of 10 percent, Harrington said.
One reason for the discrepancy is price, Harrington said. Rent for a Salem office averages $13 a square foot, while in Derry it averages $12.50 and in Londonderry $11. It might not sound like a lot, but multiplied over thousands of square feet and perhaps half a decade, business owners see a significant price difference.