In the third quarter of 2018, the U.S. office market again showed steady improvement, according to Transwestern’s national outlook for the sector. Absorption reached 22.7 million square feet, vacancy remained stable at 10.1%, and asking rents increased by 4.0%, annually.
Ryan Tharp, Research Director in Dallas, said the strong economy has contributed to the office market’s momentum, despite softer income growth in a very tight labor market.
“Real gross domestic product increased at an annualized 3.5%, according to first estimates, and personal consumption contributed 2.7% to that rate,” Tharp said. “Because inflation has remained in line with the Federal Reserve’s target of 2.0%, consumer and business confidence should keep the office market healthy well into 2019.”
A positive sign is that year-to-date net absorption in the office market was 17.1% higher at the end of the third quarter than it was for the same period last year. Dallas-Fort Worth, San Francisco and Denver led in absorption by a significant margin for the prior 12 months, with a combined 13.3 million square feet.
Meanwhile, demand and supply are headed for equilibrium as new construction activity peaked in early 2017. In the third quarter, only 146.3 million square feet was under construction nationally.
“It’s encouraging to see that office demand is broad-based across multiple sectors, with the technology and coworking sectors driving demand as we move later in the cycle,” said Michael Soto, Research Manager in Los Angeles. “If demand continues unabated, rental rate growth should moderate.”
Year-over-year, Minneapolis, San Antonio, and Charlotte, North Carolina, have experienced the most dramatic rent growth, all coming in at 10% or greater. The strong performance of secondary markets demonstrates that the office sector is not being propped up by a few formidable markets.
Download the national office market report at: http://twurls.com/3q18-us-
Related Stories
Market Data | May 6, 2022
Nonresidential construction spending down 1% in March
National nonresidential construction spending was down 0.8% in March, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.
Market Data | Apr 29, 2022
Global forces push construction prices higher
Consigli’s latest forecast predicts high single-digit increases for this year.
Market Data | Apr 29, 2022
U.S. economy contracts, investment in structures down, says ABC
The U.S. economy contracted at a 1.4% annualized rate during the first quarter of 2022.
Market Data | Apr 20, 2022
Pace of demand for design services rapidly accelerates
Demand for design services in March expanded sharply from February according to a new report today from The American Institute of Architects (AIA).
Market Data | Apr 14, 2022
FMI 2022 construction spending forecast: 7% growth despite economic turmoil
Growth will be offset by inflation, supply chain snarls, a shortage of workers, project delays, and economic turmoil caused by international events such as the Russia-Ukraine war.
Industrial Facilities | Apr 14, 2022
JLL's take on the race for industrial space
In the previous decade, the inventory of industrial space couldn’t keep up with demand that was driven by the dual surges of the coronavirus and online shopping. Vacancies declined and rents rose. JLL has just published a research report on this sector called “The Race for Industrial Space.” Mehtab Randhawa, JLL’s Americas Head of Industrial Research, shares the highlights of a new report on the industrial sector's growth.
Codes and Standards | Apr 4, 2022
Construction of industrial space continues robust growth
Construction and development of new industrial space in the U.S. remains robust, with all signs pointing to another big year in this market segment
Reconstruction & Renovation | Mar 28, 2022
Is your firm a reconstruction sector giant?
Is your firm active in the U.S. building reconstruction, renovation, historic preservation, and adaptive reuse markets? We invite you to participate in BD+C's inaugural Reconstruction Market Research Report.
Industry Research | Mar 28, 2022
ABC Construction Backlog Indicator unchanged in February
Associated Builders and Contractors reported today that its Construction Backlog Indicator remained unchanged at 8.0 months in February, according to an ABC member survey conducted Feb. 21 to March 8.
Industry Research | Mar 23, 2022
Architecture Billings Index (ABI) shows the demand for design service continues to grow
Demand for design services in February grew slightly since January, according to a new report today from The American Institute of Architects (AIA).