October 11, 2017
The third quarter 2017 office market reports are coming in, and there’s a common refrain. U.S. office markets continued to show strength, fueled by surging leasing activity, though as a result of new deliveries that are outpacing absorption, vacancies are rising for the fourth consecutive quarter.
JLL’s research showed that Q3 leasing volume reached 62.4 million square feet, the highest it has been in two years. So far, year-to-date growth has been paced by tenant expansion in Dallas and Seattle, which combined for a 35.6% share of total volume.
Cushman & Wakefield pointed to a strong tech sector and the effects of a robust construction pipeline as the primary influencers of U.S. office fundamentals. Though markets remained in a stable position during the past three months nationally, demand isn’t keeping pace with deliveries. The net result is a national vacancy rate that crept up from 13.2% in Q2 2017 to 13.3% in Q3 2017.
The latest analysis from CBRE shows vacant office space in the U.S. declined by 10 basis points (bps) during Q3 2017, dropping to 12.9%. Continuing a recent pattern, suburban office markets continued to set the pace for declines. The vacancy rate in suburban markets decreased 20 bps, to 14.1%, while downtown vacancy dipped 10 bps to 10.6%. Vacancy continued to fall in a majority of U.S. office markets, and the national office vacancy rate remains near its post-recession low, reports CBRE.
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