Transwestern’s latest national office report reflects resilience in market fundamentals, even in the face of the moderating pace of U.S. economic growth demonstrated by net job creation averaging 172,000 per month for the first half of the year. In this environment, the national vacancy rate held steady at 9.7% in the second quarter thanks to healthy preleasing levels of newly delivered office assets.
“Signals continue to point to a disciplined office market that will perform well through year-end,” said Elizabeth Norton, Managing Director of Research at Transwestern. “Especially noteworthy is that in the second quarter, annual asking rental rates grew 4.2% year over year, the fastest rate this cycle and well above the five-year average of 3.4%.”
At quarter end, the average asking rental rate was $26.83 per square foot. Annual rent growth has been strongest in Tampa, Florida (10.6%), followed by Nashville, Tennessee (9.5%); San Jose/Silicon Valley, California (9.4%); Austin, Texas (8.8%); and San Francisco (8.8%).
Additionally, net absorption more than doubled to 24 million square feet in the second quarter despite sublet space adding 1.9 million square feet back to available inventory. Absorption leaders during the past year include Seattle; Charlotte, North Carolina; Dallas-Fort Worth; Los Angeles; and Northern Virginia. Seattle posted nearly 6 million square feet of absorption during the past 12 months, bringing the metro’s vacancy rate down to 6.1%, the fourth-lowest of the 49 markets tracked by Transwestern.
Office construction activity hit its highest level of this cycle, growing 9.6% during the prior 12 months. The second quarter saw more than 21.7 million square feet of new space added to inventory, and this pace will continue through the remainder of the year. Currently, 163.6 million square feet is in the pipeline nationally.
Download the full Second Quarter 2019 U.S. Office Market Report at: http://twurls.com/us-office-
Related Stories
Hotel Facilities | Jan 13, 2016
Hotel construction should remain strong through 2017
More than 100,000 rooms could be delivered this year alone.
Market Data | Jan 6, 2016
Census Bureau revises 10 years’ worth of construction spending figures
The largest revisions came in the last two years and were largely upward.
Market Data | Jan 5, 2016
Majority of AEC firms saw growth in 2015, remain optimistic for 2016: BD+C survey
By all indications, 2015 was another solid year for U.S. architecture, engineering, and construction firms.
Market Data | Jan 5, 2016
Nonresidential construction spending falters in November
Only 4 of 16 subsectors showed gains
Market Data | Dec 15, 2015
AIA: Architecture Billings Index hits another bump
Business conditions show continued strength in South and West regions.
Market Data | Dec 7, 2015
2016 forecast: Continued growth expected for the construction industry
ABC forecasts growth in nonresidential construction spending of 7.4% in 2016 along with growth in employment and backlog.
