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
From left: Adam Altman, Martin Nussbaum, Brian Cooper, Joe Koicim
Photos: Inside Slate Property Group’s holiday party at Casa Cipriani
Photos: Inside Slate Property Group’s holiday party at Casa Cipriani
JLL Income's Allan Swaringen
JLL really wants to be a single-family megalandlord
JLL really wants to be a single-family megalandlord
JLL’s Bob Knakal and Jonathan Hageman with 245 West 55th Street (JLL, LoopNet)
Oscar-winning film lab selling Midtown property after 100 years
Oscar-winning film lab selling Midtown property after 100 years
(Illustration by The Real Deal with Getty)
Northeast industrial market still breaking records, but may have peaked
Northeast industrial market still breaking records, but may have peaked
Michael Remer and Richard Hodos (JLL, Getty)
Top retail broker Richard Hodos jumps from CBRE to JLL
Top retail broker Richard Hodos jumps from CBRE to JLL
RIPCO Real Estate’s Gene Spiegelman and Peter Ripka, JLL’s Matthew Ogle and Erin Grace (RIPCONY, JLL, Getty)
RIPCO, JLL take home REBNY’s retail deal of the year awards
RIPCO, JLL take home REBNY’s retail deal of the year awards
The development site at Long Island MacArthur Airport in Ronkonkoma  and JLL's Christian Ulbrich (Getty)
Ronkonkoma megadevelopment to drop arenas
Ronkonkoma megadevelopment to drop arenas
From left: CBRE's Daniel Kaplan and William Shanahan along with 231 East 76th Street and 340 East 52nd Street (Google Maps, CBRE, LinkedIn/Daniel Kaplan)
TRD Pro: Here are NYC’s top portfolio deals of the quarter
TRD Pro: Here are NYC’s top portfolio deals of the quarter
arrow_forward_ios

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

Loading...