Everybody’s worried about the economic slowdown, and businesses are more cautious about committing to commercial and retail space, reports Thalhimer/Cushman & Wakefield in its most recent quarterly research report, “Market Beat,” on the Richmond commercial real estate market.

The vacancy in commercial office space actually declined to 7.8 percent from 8.8 percent the same quarter a year ago, but vacancy rates are likely to rise now that Wachovia Securities, which is relocating its offices to St. Louis, has put nearly 450,000 square feet of office space at Innsbrook and Riverfront Plaza up for sub-lease. “The space willl likely fetch below-market rates,” Thalhimer reports.

Meanwhile, the average rental rate for the Richmond region slipped from $20.77 per square foot in the 2Q last year to $19.39 in the 2Q of 2008. “Landlords are becoming more aggressive to secure tenants. Incentives such as shorter lease terms, higher tenant improvements and upfront free rent tacked onto the lease are becoming the norm.”

For their part, many tenants are renewing rather than looking for larger space, “a marked departure from the past several years.” Businesses are “proceeding with extra caution,” preferring short-tem leases even if they carry a higher rental rate. More.

On the retail side, consumers may be cutting back on discretionary purchases, but retail volume was “robust” in the second quarter: 400,000 square feet of space was leased in the quarter, twice the volume of the same quarter a year ago. Retail vacancy rates dropped to 5.5 percent from 5.9 percent a year ago, and rents were up 10 percent. More.