The U.S. office market continues to be one of the economy’s growth sectors, based on what the national real estate firm Transwestern gleans from the 48 of its markets that reported first-quarter results.
More than 45% of those markets—22, to be exact—registered improvements in direct vacancy, and 30 recorded increased in direct and sublet vacancy in the first quarter.
Overall, the office market’s vacancy rate, at 9.7% in the latest quarter, remained stable compared to the same period a year ago. And the vacancy rates were considerably lower in some of the country’s hottest real estate markets, such as Seattle (8.2%), Orlando (7.8%), Tampa (7.9%), and San Francisco (8.2%).
San Francisco was also the first-quarter leader in new absorptions, at more than 1.5 million sf, followed by Seattle, Dallas/Fort Worth, and San Jose, which was the leader in trailing four-quarters net absorption (nearly 7 million sf).
San Jose, Charlotte, Manhattan, and San Francisco were among the leading metros in terms of first-quarter office absorption and rent appreciation. Image: Transwestern U.S. Markets | Offices
All told, the U.S. market absorbed 14.1 million sf of office space in the first three months of 2018. That makes 31 consecutive quarters of positive absorption growth, although the absorption rate still lags three- and five-year quarterly averages.
Conversely, 1Q18 represented the fourth straight quarter of declines in new office construction, which stood at 141.1 million sf that period. Manhattan is by far and away the most active office construction market in the country, with nearly 18 million sf in starts in the first quarter. (Manhattan also has 432.9 million sf of office inventory, whose vacancy rate was 9.1%.) The next closest construction market, DFW, had 8.29 million sf in starts. (DFW’s vacancy rate was 16.7% in the first quarter.)
(The average new construction starts for Transwestern’s markets were 2 million sf.)
The number of office employees rose to 36 million, representing a 1.9% annual growth rate.
Transwestern states that the average asking rents continued to climb in the first quarter, marking the 20th consecutive month of increases. Charlotte, N.C., saw the biggest jump in asking rents, to 15.3%, followed by East Bay/Oakland, Calif. (9.5%) and Atlanta (7.7%).
Related Stories
Market Data | Jul 21, 2022
Despite deteriorating economic conditions, nonresidential construction spending projected to increase through 2023
Construction spending on buildings is projected to increase just over nine percent this year and another six percent in 2023, according to a new report from the American Institute of Architects (AIA).
Building Team | Jul 18, 2022
Understanding the growing design-build market
FMI’s new analysis of the design-build market forecast for the next fives years shows that this delivery method will continue to grow, despite challenges from the COVID-19 pandemic.
Market Data | Jul 1, 2022
Nonresidential construction spending slightly dips in May, says ABC
National nonresidential construction spending was down by 0.6% in May, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.
Market Data | Jun 30, 2022
Yardi Matrix releases new national rent growth forecast
Rents in most American cities continue to rise slightly each month, but are not duplicating the rapid escalation rates exhibited in 2021.
Market Data | Jun 22, 2022
Architecture Billings Index slows but remains strong
Architecture firms reported increasing demand for design services in May, according to a new report today from The American Institute of Architects (AIA).
Building Team | Jun 17, 2022
Data analytics in design and construction: from confusion to clarity and the data-driven future
Data helps virtual design and construction (VDC) teams predict project risks and navigate change, which is especially vital in today’s fluctuating construction environment.
Market Data | Jun 15, 2022
ABC’s construction backlog rises in May; contractor confidence falters
Associated Builders and Contractors reports today that its Construction Backlog Indicator increased to nine months in May from 8.8 months in April, according to an ABC member survey conducted May 17 to June 3. The reading is up one month from May 2021.
Market Data | May 18, 2022
Architecture Billings Index moderates slightly, remains strong
For the fifteenth consecutive month architecture firms reported increasing demand for design services in April, according to a new report today from The American Institute of Architects (AIA).
Market Data | May 12, 2022
Monthly construction input prices increase in April
Construction input prices increased 0.8% in April compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released today.
Market Data | May 10, 2022
Hybrid work could result in 20% less demand for office space
Global office demand could drop by between 10% and 20% as companies continue to develop policies around hybrid work arrangements, a Barclays analyst recently stated on CNBC.