U.S. Office Sector Eases, but Records 8th Straight Quarter of Improving Fundamentals
WASHINGTON, April 3, 2012 /PRNewswire/ -- Demand for U.S. office space eased in the first quarter of 2012, but occupancy gains continued for the eighth straight quarter, according to Cassidy Turley, a leading commercial real estate services provider in the U.S.
The U.S. office sector absorbed 7.3 million square feet (msf) of office space in the first quarter of 2012, down from 13.4 msf registered in the previous quarter. National vacancy fell 10 basis points (bps) from the previous quarter to 15.9 percent.
"We are at a point where there is healthy job creation, but over 50 percent of the jobs created in recent months using office space were temp jobs," said Kevin Thorpe, Cassidy Turley's Chief Economist. "These jobs don't move the needle immediately for the office sector, but they do set the stage for much stronger demand numbers down the road."
Average asking rents in the U.S. rose 1.1 percent compared to a year ago from $21.60. Of the 80 major metros tracked in the report, 40 metros reported increases in rent compared to the same period one year ago; 34 metros reported declines, while six reported no change. There was 42.1 msf of new office buildings under construction at the end of the first quarter of 2012, down from 42.8 msf recorded in the previous quarter.
"U.S. office rents hit bottom at the end of 2010. But given that there are still high vacancy levels, there will not be a jump in rents anytime soon in most markets. Overall, asking rents will increase by approximately 1 percent this year," commented Mr. Thorpe.
Sales of significant office buildings in the first two months of 2012 registered at $7.8 billion, up 24 percent compared to a year ago (according to Real Capital Analytics). Average price per square foot was $453 over this period, compared to $455 in the same period one year ago.
Key regional highlights from the Q1 2012 U.S. Office Sector Report include:
- All four census regions recorded net gains in demand for office space.
- The West region led the way with 4.0 msf of new net demand, followed by the South with 2.4 msf, then the Midwest with 639,000 and the Northeast with 368,000, respectively.
- The top 10 markets in terms of net demand for office space include: Houston, San Jose, CA, Los Angeles, San Francisco, CA, Seattle, WA, Austin, TX, Denver, CO, Miami, Raleigh, NC and Orlando, FL.
- San Francisco led the country in rent growth with a 10.8 percent compared to a year-ago.
Mr. Thorpe added, "The energy and the tech-driven markets are the clear standouts right now. It has become a reoccurring theme that markets in Texas and California are leading the nation in most demand and rent growth metrics."
Cassidy Turley's Q1 2012 U.S. Office Sector Report will be available on the company's website on April 13, 2012.
About Cassidy Turley
Cassidy Turley is a leading commercial real estate services provider with more than 3,500 professionals in more than 60 offices nationwide. The company represents a wide range of clients—from small businesses to Fortune 500 companies, from local non-profits to major institutions. The firm completed transactions valued at $22 billion in 2011, manages 455 million square feet on behalf of institutional, corporate and private clients and supports more than 28,000 domestic corporate services locations. Cassidy Turley serves owners, investors and tenants with a full spectrum of integrated commercial real estate services—including capital markets, tenant representation, corporate services, project leasing, property management, project and development services, and research and consulting. Cassidy Turley enhances its global service delivery outside of North America through a partnership with GVA, giving clients access to commercial real estate professionals across the globe. Please visit www.cassidyturley.com for more information about Cassidy Turley.
SOURCE Cassidy Turley