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Our latest U.S. Top Office Metros Snapshot Q3 2016 shows that office market conditions moderated during the third quarter in the core areas of the top 10 investment markets. Though…
FEATURED HIGHLIGHTS
- The U.S. economy added an average of 162,000 jobs in August and September, down 38 percent from the prior two months. Though still healthy enough to fuel new leasing, occupancy trends nonetheless suffered, as half of the markets saw net absorption declines in Q3 2016 compared to Q2 2016.
- Asking rents in the core areas of all 10 markets increased in Q3 2016 compared to Q2 2016, while nine of the 10 increased over Q3 2015. Pricing adjustments generally lag behind softening vacancy and absorption conditions, so we can anticipate weaker rent growth through year-end, particularly if absorption continues to slow.
- Tech growth in Seattle continues to drive the market to new highs, as Amazon has spread to Bellevue, drawing many other tech firms to look outside of Seattle proper. Professional services growth and corporate relocations have pushed the Uptown submarket in Dallas to record-breaking highs in asking rent, with some top-tier buildings commanding a once unthinkable $50-$60 per square foot.
- The San Francisco Bay Area recovered from its modest slowdown in the second quarter, showing strong occupancy gains, particularly in the East Bay. On the other hand, Houston went into reverse, with the CBD registering a decline in net absorption and a significant rise in vacancy during the third quarter.
- Co-working firms continue to lease large blocks of space across major markets. However, some concern is developing as to their valuations and ability to withstand a potential downturn, as much of their rapid growth has occurred during the current economic expansion.
* The Manhattan office market typically cites supply based on the availability rate (10.0%).
The availability rate is actively marketed space scheduled for tenant build-out within 12 months.
For more details on the latest office trends in these top metro markets, download the U.S. Top Office Metros Snapshot Q3 2016 and look for our full Q3 2016 U.S. Office Report coming soon.
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