July 11, 2019
The latest research from Los Angeles-based CBRE shows show the U.S. office vacancy rate decreased during Q2 2019, by 10 bps, to 12.2%, with the rate for suburban submarkets decreasing and the downtown rate going unchanged. Overall, the markets tracked by the firm registered a very healthy 60-bps drop for the past four quarters, as the office sector regained momentum.
CBRE says the strong annual decline is even more notable given the large volume of new supply delivered in the past year, and the more efficient use of office space by tenants. During the quarter, vacancy continued to fall in most U.S. office markets (40 of 63), while rising in 19 and remaining unchanged in four. Suburban vacancy was down 20 bps to 13.2% and downtown flat at 10.4%.
The largest quarterly declines in vacancy were recorded in Trenton (-170 bps), San Jose (-100 bps), Tucson (-100 bps), and Louisville (-90 bps). Las Vegas, Miami, Austin, Norfolk, Fort Lauderdale, Albany, Albuquerque, Boston, Charlotte and Honolulu each declined by 40 bps or more. CBRE reports over the past four quarters it has observed tightening vacancy in a wide range of market sizes, predominately in the Sunbelt — including Austin, Albuquerque, San Jose, Sacramento, San Antonio, Newark, Charlotte, Las Vegas, Houston, Fort Lauderdale, Trenton, Denver, Toledo, San Francisco and Wilmington, DE. Tech and research markets continued to record the nation’s lowest vacancy rates, including San Francisco (5.1%), Seattle (6.9%), Austin (7.3%), Raleigh (7.9%), Boston (8.5%) and New York (9.0%).
Among the markets that recorded vacancy rate increases, CBRE says Oklahoma City, Indianapolis and St. Louis recorded the largest (more than 60 bps), due to new supply and renovations coming online this quarter. Portland, Atlanta, Salt Lake City and Wilmington, DE reported rate increases of 40 bps or more. The nation’s highest vacancy rates were in Houston (21.3%), Minneapolis (18.5%), Dallas (18.4%), Albuquerque (18.4%), Fort Worth (17.3%), Hartford (16.9%) and Newark (15.9%), according to CBRE.
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