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 | May 21, 2020
7 must reads for the AEC industry today: May 21, 2020
'Creepy' tech invades post-pandemic offices, and meet the new darling of commercial real estate.
Market Data | May 20, 2020
6 must reads for the AEC industry today: May 20, 2020
A wave 'inside' a South Korean building and architecture billings continues historic contraction.
Market Data | May 20, 2020
Architecture billings continue historic contraction
AIA’s Architecture Billings Index (ABI) score of 29.5 for April reflects a decrease in design services provided by U.S. architecture firms.
Market Data | May 19, 2020
5 must reads for the AEC industry today: May 19, 2020
Clemson's new mass timber building and empty hotels as an answer for the affordable housing shortage.
Market Data | May 18, 2020
5 must reads for the AEC industry today: May 18, 2020
California's grid can support all-electric buildings and you'll miss your office when it's gone.
Market Data | May 15, 2020
6 must reads for the AEC industry today: May 15, 2020
Nonresidential construction employment sees record loss and Twitter will keep all of its office space.
Market Data | May 15, 2020
Nonresidential construction employment sees record loss in April
The construction unemployment rate was 16.6% in April, up 11.9 percentage points from the same time last year.
Market Data | May 14, 2020
5 must reads for the AEC industry today: May 14, 2020
The good news about rent might not be so good and some hotel developers consider whether to abandon projects.
Market Data | May 13, 2020
House democrats' coronavirus measure provides some relief for contractors, but lacks other steps needed to help construction
Construction official says new highway funding, employee retention credits and pension relief will help, but lack of safe harbor measure, Eextension of unemployment bonus will undermine recovery.
Market Data | May 13, 2020
5 must reads for the AEC industry today: May 13, 2020
How to design resilient libraries in a post-covid world and vacation real-estate markets are 'toast.'