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 | Aug 21, 2019
Architecture Billings Index continues its streak of soft readings
Decline in new design contracts suggests volatility in design activity to persist.
Market Data | Aug 19, 2019
Multifamily market sustains positive cycle
Year-over-year growth tops 3% for 13th month. Will the economy stifle momentum?
Market Data | Aug 16, 2019
Students say unclean restrooms impact their perception of the school
The findings are part of Bradley Corporation’s Healthy Hand Washing Survey.
Market Data | Aug 12, 2019
Mid-year economic outlook for nonresidential construction: Expansion continues, but vulnerabilities pile up
Emerging weakness in business investment has been hinting at softening outlays.
Market Data | Aug 7, 2019
National office vacancy holds steady at 9.7% in slowing but disciplined market
Average asking rental rate posts 4.2% annual growth.
Market Data | Aug 1, 2019
Nonresidential construction spending slows in June, remains elevated
Among the 16 nonresidential construction spending categories tracked by the Census Bureau, seven experienced increases in monthly spending.
Market Data | Jul 31, 2019
For the second quarter of 2019, the U.S. hotel construction pipeline continued its year-over-year growth spurt
The growth spurt continued even as business investment declined for the first time since 2016.
Market Data | Jul 23, 2019
Despite signals of impending declines, continued growth in nonresidential construction is expected through 2020
AIA’s latest Consensus Construction Forecast predicts growth.
Market Data | Jul 20, 2019
Construction costs continued to rise in second quarter
Labor availability is a big factor in that inflation, according to Rider Levett Bucknall report.
Market Data | Jul 18, 2019
Construction contractors remain confident as summer begins
Contractors were slightly less upbeat regarding profit margins and staffing levels compared to April.