U.S. office rents inch up in October

The U.S. office market’s recovery continued in October, though the improvements were tepid.

The national average listing rate for rent in October was $32.81 per square foot, up 0.1 percent year over year, according to a market report from commercial real estate data firm Yardi Matrix.

Meanwhile, vacancy ticked down by 90 basis points year over year to 18.6 percent nationally.

Los Angeles had the greatest rental growth among U.S. metros. In October, the average rent came in at $46.62 per square foot, a 10.4 percent increase compared to the same month last year.

Meanwhile, Houston’s average office rent tanked by 9 percent — the steepest drop among the top cities in the U.S. — to $27.49 per square foot.

Seattle’s office market, hit hard by recent mass tech layoffs and companies downsizing their spaces, had the highest vacancy rate in the country of just over 27 percent, a 160-basis-point increase compared to the same time last year, per Yardi. Manhattan’s was the lowest, at 13 percent. That’s down 370 basis points year over year.

Developers have pulled back on constructing office properties after the industry’s shake-up during and immediately after the pandemic. In October, there were 12.9 million square feet of construction starts across the country, about flat from last year, according to Yardi, which noted that it likely will be years before the sector sees a major boost in new office builds.

Nationwide, there is about 33.4 million square feet of office space underway. Most of that space — 4.6 million square feet — is in Boston.

Office real estate has been slowly rebounding over the past few months. In September, the office sector posted the strongest sales price growth among commercial real estate’s property types, climbing by 1.4 percent month over month. The asset class also had performed the best over the prior three months.