Transwestern’s latest national office report reflects resilience in market fundamentals, even in the face of the moderating pace of U.S. economic growth demonstrated by net job creation averaging 172,000 per month for the first half of the year. In this environment, the national vacancy rate held steady at 9.7% in the second quarter thanks to healthy preleasing levels of newly delivered office assets.
“Signals continue to point to a disciplined office market that will perform well through year-end,” said Elizabeth Norton, Managing Director of Research at Transwestern. “Especially noteworthy is that in the second quarter, annual asking rental rates grew 4.2% year over year, the fastest rate this cycle and well above the five-year average of 3.4%.”
At quarter end, the average asking rental rate was $26.83 per square foot. Annual rent growth has been strongest in Tampa, Florida (10.6%), followed by Nashville, Tennessee (9.5%); San Jose/Silicon Valley, California (9.4%); Austin, Texas (8.8%); and San Francisco (8.8%).
Additionally, net absorption more than doubled to 24 million square feet in the second quarter despite sublet space adding 1.9 million square feet back to available inventory. Absorption leaders during the past year include Seattle; Charlotte, North Carolina; Dallas-Fort Worth; Los Angeles; and Northern Virginia. Seattle posted nearly 6 million square feet of absorption during the past 12 months, bringing the metro’s vacancy rate down to 6.1%, the fourth-lowest of the 49 markets tracked by Transwestern.
Office construction activity hit its highest level of this cycle, growing 9.6% during the prior 12 months. The second quarter saw more than 21.7 million square feet of new space added to inventory, and this pace will continue through the remainder of the year. Currently, 163.6 million square feet is in the pipeline nationally.
Download the full Second Quarter 2019 U.S. Office Market Report at: http://twurls.com/us-office-
Related Stories
Market Data | Aug 2, 2021
Nonresidential construction spending falls again in June
The fall was driven by a big drop in funding for highway and street construction and other public work.
Market Data | Jul 29, 2021
Outlook for construction spending improves with the upturn in the economy
The strongest design sector performers for the remainder of this year are expected to be health care facilities.
Market Data | Jul 29, 2021
Construction employment lags or matches pre-pandemic level in 101 metro areas despite housing boom
Eighty metro areas had lower construction employment in June 2021 than February 2020.
Market Data | Jul 28, 2021
Marriott has the largest construction pipeline of U.S. franchise companies in Q2‘21
472 new hotels with 59,034 rooms opened across the United States during the first half of 2021.
Market Data | Jul 27, 2021
New York leads the U.S. hotel construction pipeline at the close of Q2‘21
Many hotel owners, developers, and management groups have used the operational downtime, caused by COVID-19’s impact on operating performance, as an opportunity to upgrade and renovate their hotels and/or redefine their hotels with a brand conversion.
Market Data | Jul 26, 2021
U.S. construction pipeline continues along the road to recovery
During the first and second quarters of 2021, the U.S. opened 472 new hotels with 59,034 rooms.
Market Data | Jul 21, 2021
Architecture Billings Index robust growth continues
AIA’s Architecture Billings Index (ABI) score for June remained at an elevated level of 57.1.
Market Data | Jul 20, 2021
Multifamily proposal activity maintains sizzling pace in Q2
Condos hit record high as all multifamily properties benefit from recovery.
Market Data | Jul 19, 2021
Construction employment trails pre-pandemic level in 39 states
Supply chain challenges, rising materials prices undermine demand.
Market Data | Jul 15, 2021
Producer prices for construction materials and services soar 26% over 12 months
Contractors cope with supply hitches, weak demand.
