Transwestern’s second-quarter national office market report highlights continued improvement in the sector thanks in large part to a strong jobs market with remarkably low overall unemployment of 3.9%, and a 1.6% annual growth rate in office-using employment.
For the second quarter, office absorption totaled 18.8 million square feet, vacancy remained stable at 9.6%, and average asking rents increased by 3.4% annually to $25.71 per square foot.
“As more individuals return to the workforce citing real wage growth, further tightening in the core metrics is anticipated through the balance of the year,” said Stuart Showers, Research Director in Houston.
The rise in rental rates marks the 21st consecutive quarterly increase, with Minneapolis; Charlotte, North Carolina; Columbus, Ohio; San Antonio and Austin, Texas leading the nation in year-over-year rent growth. San Francisco edged out New York for the highest asking rates in the country at $74.40 per square foot.
“Despite only 4 million square feet currently under construction in San Francisco versus more than 14 million square feet in New York, San Francisco is increasing total inventory by a higher percentage, which could drive asking rates even higher as new product comes online,” said Ryan Tharp, Research Director in Dallas. “Additionally, existing tariffs on steel and aluminum are likely to drive up construction costs, and landlords may need to bump up rental rates to compensate.”
Worth noting is that while national quarterly absorption remained positive, the pace of absorption is slowing as quarterly totals are approximately 20% below three- and five-year quarterly averages. Overall, 34 of the 49 Transwestern reporting markets registered positive absorption in the second quarter, underscoring the strength of the sector.
Download the national office market report at: http://twurls.com/2q18-us-offi
Related Stories
Market Data | May 24, 2021
Construction employment in April remains below pre-pandemic peak in 36 states and D.C.
Texas and Louisiana have worst job losses since February 2020, while Utah and Idaho are the top gainers.
Market Data | May 19, 2021
Design activity strongly increases
Demand signals construction is recovering.
Multifamily Housing | May 18, 2021
Multifamily housing sector sees near record proposal activity in early 2021
The multifamily sector led all housing submarkets, and was third among all 58 submarkets tracked by PSMJ in the first quarter of 2021.
Market Data | May 18, 2021
Grumman|Butkus Associates publishes 2020 edition of Hospital Benchmarking Survey
The report examines electricity, fossil fuel, water/sewer, and carbon footprint.
Market Data | May 13, 2021
Proliferating materials price increases and supply chain disruptions squeeze contractors and threaten to undermine economic recovery
Producer price index data for April shows wide variety of materials with double-digit price increases.
Market Data | May 7, 2021
Construction employment stalls in April
Soaring costs, supply-chain challenges, and workforce shortages undermine industry's recovery.
Market Data | May 4, 2021
Nonresidential construction outlays drop in March for fourth-straight month
Weak demand, supply-chain woes make further declines likely.
Market Data | May 3, 2021
Nonresidential construction spending decreases 1.1% in March
Spending was down on a monthly basis in 11 of the 16 nonresidential subcategories.
Market Data | Apr 30, 2021
New York City market continues to lead the U.S. Construction Pipeline
New York City has the greatest number of projects under construction with 110 projects/19,457 rooms.
Market Data | Apr 29, 2021
U.S. Hotel Construction pipeline beings 2021 with 4,967 projects/622,218 rooms at Q1 close
Although hotel development may still be tepid in Q1, continued government support and the extension of programs has aided many businesses to get back on their feet as more and more are working to re-staff and re-open.