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 | Jun 23, 2020
7 must reads for the AEC industry today: June 23, 2020
Gyms are going bacnkrupt and leaving gaps in shopping centers and how hotels are trying to keep guests and employees safe.
Market Data | Jun 22, 2020
New House infrastructure package will provide needed investments in aging infrastructure, support economic recovery, and create jobs
The Moving Forward Act’s proposed $1.5 trillion in new investments will improve range of public infrastructure, creating needed demand for construction while making the economy more efficient.
Market Data | Jun 22, 2020
7 must reads for the AEC industry today: June 22, 2020
Construction employment rises from April to May in 45 states and the first building in the U.S. designed for post COVID-19 environment.
Market Data | Jun 22, 2020
Construction employment rises from April to May in 45 states, slips in 5
Rebound from April job losses reflects one-shot help from paycheck protection program loans and easing of stay-at-home orders, but cancellations and state and local deficits imply further cuts ahead.
Market Data | Jun 19, 2020
7 must reads for the AEC industry today: June 19, 2020
Brown University's first housing building in three decades and demand for family rentals expected to jump.
Market Data | Jun 18, 2020
New data shows construction activity returning to pre-coronavirus levels in many parts of the country
Association survey and data collected by Procore measure impacts of the pandemic, showing signs of a construction recovery, but labor shortages and project cancellations show industry needs federal help.
Market Data | Jun 18, 2020
AIA releases strategies and illustrations for reducing risk of COVID-19 in schools
For the 2020-21 school year, districts are facing the difficult task of determining if K-12 schools will reopen this fall.
Market Data | Jun 18, 2020
6 must reads for the AEC industry today: June 18, 2020
Northbrook's new cannabis dispensary and America's structural steel industry remains a success story.
Market Data | Jun 17, 2020
6 must reads for the AEC industry today: June 17, 2020
Santa Fe becomes the second city in the world to achieve LEED v4.1 and the megacity is dead.
Market Data | Jun 16, 2020
7 must reads for the AEC industry today: June 16, 2020
Tottenham Hotspur Stadium has its own brewery and workers want policy changes before they return to offices.