CHICAGO-The fourth quarter saw the biggest jump in absorption all year in the national office market, according to a report by Jones Lang LaSalle. From October to December, absorption gained about eight million square feet, more than half of the 13.1 million square feet gained for all of 2010.
John Sikaitis, director of research for the company, tells GlobeSt.com that companies now have more cash on hand than at any other time since this data track began in 1952. “As a result, corporate balance sheets are strong, particularly with technology firms, and employment gains are being made in many of the core markets,” he says.
He says job openings in the fourth quarter were up 32% compared to the same period in 2009, and layoffs are down 19%. Nearly 70% of the markets the company tracks finished the year with occupancy gains, with New York City and Washington, DC topping the list. “We saw gains in more than 65% of the large markets,” Sikaitis says. However, a few of the Midwest markets, including Chicago, Detroit and Cleveland, showed negative office absorption due to trailing employment markets, he says.
Absorption gains should more than triple this year, he says, as fundamentals align with the market, Sikaitis says. He says vacancy levels should drop nationwide down from 18.5% today to 17%. “Next year, users looking for large blocks of space will be at a disadvantage, as blocks of space 75,000 square feet or more are becoming rare, giving owners the opportunity to raise rents and decrease concessions,” Sikaitis says.
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