In the third quarter of 2018, the U.S. office market again showed steady improvement, according to Transwestern’s national outlook for the sector. Absorption reached 22.7 million square feet, vacancy remained stable at 10.1%, and asking rents increased by 4.0%, annually.
Ryan Tharp, Research Director in Dallas, said the strong economy has contributed to the office market’s momentum, despite softer income growth in a very tight labor market.
“Real gross domestic product increased at an annualized 3.5%, according to first estimates, and personal consumption contributed 2.7% to that rate,” Tharp said. “Because inflation has remained in line with the Federal Reserve’s target of 2.0%, consumer and business confidence should keep the office market healthy well into 2019.”
A positive sign is that year-to-date net absorption in the office market was 17.1% higher at the end of the third quarter than it was for the same period last year. Dallas-Fort Worth, San Francisco and Denver led in absorption by a significant margin for the prior 12 months, with a combined 13.3 million square feet.
Meanwhile, demand and supply are headed for equilibrium as new construction activity peaked in early 2017. In the third quarter, only 146.3 million square feet was under construction nationally.
“It’s encouraging to see that office demand is broad-based across multiple sectors, with the technology and coworking sectors driving demand as we move later in the cycle,” said Michael Soto, Research Manager in Los Angeles. “If demand continues unabated, rental rate growth should moderate.”
Year-over-year, Minneapolis, San Antonio, and Charlotte, North Carolina, have experienced the most dramatic rent growth, all coming in at 10% or greater. The strong performance of secondary markets demonstrates that the office sector is not being propped up by a few formidable markets.
Download the national office market report at: http://twurls.com/3q18-us-
Related Stories
Senior Living Design | May 9, 2017
Designing for a future of limited mobility
There is an accessibility challenge facing the U.S. An estimated 1 in 5 people will be aged 65 or older by 2040.
Industry Research | May 4, 2017
How your AEC firm can go from the shortlist to winning new business
Here are four key lessons to help you close more business.
Engineers | May 3, 2017
At first buoyed by Trump election, U.S. engineers now less optimistic about markets, new survey shows
The first quarter 2017 (Q1/17) of ACEC’s Engineering Business Index (EBI) dipped slightly (0.5 points) to 66.0.
Market Data | May 2, 2017
Nonresidential Spending loses steam after strong start to year
Spending in the segment totaled $708.6 billion on a seasonally adjusted, annualized basis.
Market Data | May 1, 2017
Nonresidential Fixed Investment surges despite sluggish economic in first quarter
Real gross domestic product (GDP) expanded 0.7 percent on a seasonally adjusted annualized rate during the first three months of the year.
Industry Research | Apr 28, 2017
A/E Industry lacks planning, but still spending large on hiring
The average 200-person A/E Firm is spending $200,000 on hiring, and not budgeting at all.
Market Data | Apr 19, 2017
Architecture Billings Index continues to strengthen
Balanced growth results in billings gains in all regions.
Market Data | Apr 13, 2017
2016’s top 10 states for commercial development
Three new states creep into the top 10 while first and second place remain unchanged.
Market Data | Apr 6, 2017
Architecture marketing: 5 tools to measure success
We’ve identified five architecture marketing tools that will help your firm evaluate if it’s on the track to more leads, higher growth, and broader brand visibility.
Market Data | Apr 3, 2017
Public nonresidential construction spending rebounds; overall spending unchanged in February
The segment totaled $701.9 billion on a seasonally adjusted annualized rate for the month, marking the seventh consecutive month in which nonresidential spending sat above the $700 billion threshold.
