Tech powers U.S. office market improvements

New York /
Oct.October 20, 2011 03:06 PM

With absorption increasing and vacancy rates on the decline, the U.S. office market is strengthening. But the slow job growth in the last six months could be the harbinger of another slowdown. It’s a similar story to the one shown in New York City office market reports of late.

According to a third-quarter report released today by Jones Lang LaSalle, the office market absorbed about 9.4 million square feet in the third quarter, bringing year-to-date absorption to 24.5 million square feet. That’s 75 percent more than was absorbed during the first three quarters of last year, thanks largely to cities with clusters of technology firms.

Simultaneously, vacancy rates dipped below 18 percent for the first time in more than two years, dropping three-tenths of a percentage point to 17.8. Rents rose 30 cents per square foot nationwide to $27.74. Leasing activity in the third quarter dropped 12 percent from the prior-year quarter.

While that paints a relatively positive picture of the market, JLL said it is wary moving forward as the country has added just 40,000 jobs per month since April.

“We typically see transactions slow during the summer months,” said John Sikaitis, director of research at JLL. “However, this slowdown in leasing volume was compounded by the declining confidence levels of senior executives who have once again put hiring and growth plans on the sidelines.”

The exceptions to this expected slowdown are areas where the technology sector is booming, such as San Francisco, Silicon Valley, Denver and Seattle. Combined with Austin, Dallas, Houston and San Antonio, those areas accounted for 10.1 million square feet of occupancy gains, or about 41 percent of the national total.

Like other recent reports, JLL notes that New York City’s office market is faring well as rents in trophy buildings have returned to near-peak levels. — Adam Fusfeld


Related Articles

arrow_forward_ios
JLL CEO Christian Ulbrich. (Getty)
JLL explores sale of China property management wing
JLL explores sale of China property management wing
From left: JLL’s Tim Rivers, Levine Kellogg’s Jeffrey Schneider, Meland Budwick’s Mark Meland, Blanca Commercial Real Estate’s Tere Blanca, Savills’ Tom Capocefalo and Collier’s Jonathan Kingsley
The money’s moving to South Florida. Will the office leases follow?
The money’s moving to South Florida. Will the office leases follow?
Newmark’s Barry Gosin (left) and CBRE’s Bob Sulentic
Weird flex but OK: How CRE giants hope to cash in on the future of the office
Weird flex but OK: How CRE giants hope to cash in on the future of the office
 JLL CEO of capital markets Richard Bloxam and Roofstock CEO Gary Beasley (JLL, Roofstock, iStock)
JLL gets in rental home business
JLL gets in rental home business
JLL CEO Christian Ulbrich (Photo via Jll/Twitter; Photo Illustration by Kevin Rebong for The Real Deal)
JLL earnings fell 24% in 2020
JLL earnings fell 24% in 2020
Brock Emmetsberger and B6 CEO Paul Massey (Photos via JLL; Massey via Axel Dupeux)
Veteran broker Brock Emmetsberger joins B6
Veteran broker Brock Emmetsberger joins B6
JLL CEO Christian Ulbrich, Trump International Hotel in Washington DC and Donald Trump (Getty; Trump Hotels)
JLL backs out of selling Trump’s DC hotel
JLL backs out of selling Trump’s DC hotel
JLL CEO Christian Ulbrich (Getty)
JLL says hasn’t seen “anything worth spending our…money on” after reportedly passing on Cushman
JLL says hasn’t seen “anything worth spending our…money on” after reportedly passing on Cushman
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...