SAN FRANCISCO—Although office vacancy rates have been declining generally over the past several quarters, some of the biggest winners in the second quarter were non-CBD markets, says Cushman & Wakefield. “The early positive momentum generated in the first quarter continued,” says Maria Sicola, head of research for the Americas at C&W. “That momentum can be seen in terms of absorption and rental rate growth.”

In San Francisco, where Sicola is based, Q2 vacancy for non-CBD space was lower than that of CBD office: 4.4% compared to 7.4% for the CBD. That's also the case in 11 other markets C&W tracks, with the difference ranging from a percentage point or two (Atlanta) to a non-CBD vacancy rate that's half that of the CBD (Silicon Valley).

Although total leasing activity was off by 3.5% year over year, C&W says non-CBD markets were up slightly. Northern Virginia saw the biggest Y-O-Y improvement, 138%, thanks to a mix of government-related and private sector tenants that have once again become active; followed by Central New Jersey, up 100%, driven by the pharmaceutical and communications sectors.

“With mergers and consolidations completed, the pharmaceutical sector in Central New Jersey is seeing renewed growth,” Sicola says. “Those mergers and consolidations had resulted in some layoffs, and entrepreneurial former employees have sparked a wave of new start-ups.”

Non-CBD markets also saw healthier absorption, with Silicon Valley leading the way. Technology-based tenants came on especially strong in the Silicon Valley communities of Mountain View, Sunnyvale and Santa Clara.

Sicola points out that although Q2 CBD market absorption was off compared to a year ago, “it's important to note that 70% of the markets we track have experienced increased occupancy levels this year. Financial services downsizing in Downtown New York and the downturn in Houston's energy sector have negatively impacted overall CBD absorption, which has otherwise been strong.”

Another Manhattan submarket, Midtown South, continues to maintain the lowest CBD vacancy rate at 6.2%. Across the board, vacancies have slowly but surely reached their lowest levels since 2008, averaging 11.8% in CBD markets and 16.1% in non-CBDs, according to C&W.

“Several markets are expected to see some large-scale occupancies in the second half of 2015,” says Sicola. Accordingly, C&W expects to see vacancy rates continue to decrease for the balance of the year. “We also expect to see average asking rents continue to improve as a result of the strong demand for high-quality space.”

Occupancies are approaching 70% in newly constructed properties, C&W says. Nearly 11 million square feet of space has been completed nationally year to date, with an additional 23.2 million square feet in the pipeline for the remainder of the year.

One area in which CBDs have it over non-CBDs is in asking rent increases. On average, they're up 4.5% Y-O-Y in CBDs and 2.3% in non-CBDs. CBD markets experiencing the greatest increases include San Francisco, up 14%; Portland, OR, 13.2%; and Dallas, 11.7%. “Those increases are attributable to the fact that those markets have significantly tightened,” observes Sicola.