Transwestern’s first quarter national office report confirmed the general opinion that the U.S. office market remains strong, with overall vacancy holding steady at 9.8%. National average asking rents nudged higher during the quarter to $26.63 per square foot, reflecting a 4.1% annual growth rate that exceeded the five-year compound annual average (CAGR) of 3.4%.
Of the 49 U.S. markets tracked by Transwestern, 45 reported positive rent growth, with 24 of those recording rates above 3.0%. The leaders in rent growth included Minneapolis; San Francisco; San Jose, California; Nashville, Tennessee; Raleigh/Durham, North Carolina; Tampa, Florida; Pittsburgh; California’s Inland Empire; Manhattan; and Charlotte, North Carolina.
“The U.S. economy grew 3.2% in the first quarter, the highest first-quarter growth in four years,” said Ryan Tharp, Research Director in Dallas. “That said, we are closely watching how factors such as U.S. trade conditions might impact the domestic economy in the remainder of 2019.”
Overall office leasing activity in the U.S. has slowed since 2016 but still ended the first quarter 1.5 million square feet higher than a year ago. Net absorption fell to 10.9 million square feet, with sublet space recording negative growth of 1.6 million square feet.
Construction activity jumped 9.7% during the past year, the highest level in the current cycle, but rising land and construction costs and labor challenges continue to limit new building deliveries and stave off systemic overbuilding that undermined some previous cycles.
“Solid fundamentals and adequate debt and equity capital bode well for continued, healthy performance in the office sector and cap rates remain at historic lows,” Tharp said. “We expect asking rents to settle at an annual rate of growth between 3.0% and 3.5% by the end of the year.”
Download the full National Office Market Report at: http://twurls.com/1q19-us-office
Related Stories
Market Data | Nov 23, 2020
Construction employment is down in three-fourths of states since February
This news comes even after 36 states added construction jobs in October.
Market Data | Nov 18, 2020
Architecture billings remained stalled in October
The pace of decline during October remained at about the same level as in September.
Market Data | Nov 17, 2020
Architects face data, culture gaps in fighting climate change
New study outlines how building product manufacturers can best support architects in climate action.
Market Data | Nov 10, 2020
Construction association ready to work with president-elect Biden to prepare significant new infrastructure and recovery measures
Incoming president and congress should focus on enacting measures to rebuild infrastructure and revive the economy.
Market Data | Nov 9, 2020
Construction sector adds 84,000 workers in October
A growing number of project cancellations risks undermining future industry job gains.
Market Data | Nov 4, 2020
Drop in nonresidential construction offsets most residential spending gains as growing number of contractors report cancelled projects
Association officials warn that demand for nonresidential construction will slide further without new federal relief measures.
Market Data | Nov 2, 2020
Nonresidential construction spending declines further in September
Among the sixteen nonresidential subcategories, thirteen were down on a monthly basis.
Market Data | Nov 2, 2020
A white paper assesses seniors’ access to livable communities
The Joint Center for Housing Studies and AARP’s Public Policy Institute connect livability with income, race, and housing costs.
Market Data | Nov 2, 2020
More contractors report canceled projects than starts, survey finds
Construction employment declined in most metros in latest 12 months.
Multifamily Housing | Oct 30, 2020
The Weekly show: Multifamily security tips, the state of construction industry research, and AGC's market update
BD+C editors speak with experts from AGC, Charles Pankow Foundation, and Silva Consultants on the October 29 episode of "The Weekly." The episode is available for viewing on demand.