The U.S. office market could turn to slosh in 2019, as developers were expected to add 68 million square feet of space this year — the highest increase since 2008.
The massive development could lead to downward pressure on the country’s office rent growth, the Wall Street Journal reported. Citing a Cushman & Wakefield report, the Journal reported office rents have been rising across the U.S. for the past several years. From January through September, that reached an average of $30.95 a square foot, an increase of 2.1 percent compared to the same period in 2017.
“We are moving into greater opportunities for tenants,” Revathi Greenwood, Americas head of research for Cushman & Wakefield, told the Journal. Greenwood added that the vacancy rate is expect to rise to 13.7 percent in 2019 from 13.3 this year.
In Chicago, through the third quarter, downtown office rents stayed flat and absorption slowed, potentially signaling a better environment for tenants.
The new forecast could also temper expectations for Manhattan office condo sales, which has seen a 23 percent price growth over the five-year average to $934 a square foot. [WSJ] — David Jeans