Feb. 22--The global recession has hit the commercial real estate market in the Richmond area, with more vacant space and falling rents and real estate values.

All segments -- office, industrial and retail -- have felt the sting, according to local commercial real estate firms.

"Richmond continues to feel the shock to the economy that began in the third quarter and continued with a precipitous decline in the national and world economy not encountered in decades," according to a report by the Grubb & Ellis/Harrison & Bates brokerage in Richmond.

Huge blocks of commercial space are expected to come on the market this year as operations wind down at fallen giants Circuit City Stores, LandAmerica Financial Group and Qimonda.

Circuit City, an electronics retailer, is being liquidated. LandAmerica's two main operating subsidiaries were sold to a Florida-based company. And the Qimonda chip maker is closing its plant in eastern Henrico County.

Meanwhile, unemployment is rising in the area, which means less commercial space is needed, as corporate America becomes leaner and more efficient. The jobless rate in the Richmond area increased to 5.5 percent in December, up from 3.4 percent for the same month in 2007.

What's more, foreclosures could spill from housing into the commercial real estate sector. Foreclosures on older buildings in downtown Richmond are possible this year, according to the Grubb & Ellis report.

"Historically, the Richmond market has weathered boom and bust cycles very well," according to a report by brokerage CB Richard Ellis. "The pendulum never swings as far in our market, and time will tell if this downturn will be any different than those of the past."

Office sector

The northwest part of the Richmond market -- "typically the premier quadrant" -- had an abysmal showing last year, John C. Gentry wrote in the Grubb & Ellis report.

The northwest quadrant is the area north of the James River and west of Interstate 95, which includes the Innsbrook Corporate Center.

The vacancy rate there rose to 12.4 percent at year's end, up from 9.7 percent in 2007. Sublease space became plentiful with more than 522,000 square feet, the most of any quadrant.

A rate of 10 percent or less is considered healthy, real estate experts say.

"The lease transaction pipeline in our market is currently very dry, particularly as it relates to large tenants," Gentry said.

"For the first time in decades, there are no big corporate engines prepared to take down large blocks of space in 2009," he said.