NEW YORK CITY—Office metrics improved in the second quarter across most of the top 21 markets, NAI Global said Tuesday. The brokerage firm said 16 of the 21 cities saw improving net absorption in Q2, compared to just three in Q1. A sizable majority also experienced drops in vacancy and increases in asking rents during the quarter.
Eighteen of the 21 markets analyzed saw drops in vacancy during Q2, according to NAI. Six of the 18—Baltimore, Kansas City, Minneapolis, New York City, Philadelphia and Sacramento—also saw an increase in construction, indicating that demand in those markets may be greater than supply.
Houston, San Diego and San Francisco were the only three markets to see increases in vacancy, with Houston and San Diego also reporting negative absorption. San Francisco was the only market where net absorption decreased, although still on the positive side, while simultaneously experiencing an increase in vacancy.
Rental rates increased in 16 of 21 markets measured, compared to 14 in Q1. Boston, Chicago, Houston, Seattle/Puget Sound and St. Louis all reported decreases in their average asking rents.
Ten markets saw an increase in office construction in Q2 2016, which is similar to the eight markets that showed an increase of construction at the end of Q1 2016, indicating steady and consistent growth. Dallas/Fort Worth, Houston, New York City, and San Francisco reported the largest amount of completed construction in Q2 with a total of 6,249,234 sq. ft. delivered. Dallas/Fort Worth, New York City, Seattle/Puget Sound and Washington, D.C. reported the largest amount of ongoing construction with a total of 42,024,456 sq. ft.
Ten markets saw an increase in office construction in Q2, compared to eight that saw increases in Q1. Dallas/Fort Worth, Houston, New York City and San Francisco reported the largest amount of completed construction in Q2 with a total of 6.2 million square feet. Among them, Dallas/Fort Worth, New York City, Seattle/Puget Sound and Washington, DC reported the largest amount of ongoing construction with a total of 42 million square feet.
“The landscape for commercial real estate in the US office sector continues to grow and present investors with interesting opportunities,” says Jay Olshonsky, president of NAI Global. “With net absorption and rental rates increasing, coupled with vacancies trending downward in the majority of the largest US markets, it is evident that the current environment for the US office sector is heathy and remains poised for continuous growth.”
Eighteen of the 21 markets analyzed saw drops in vacancy during Q2, according to NAI. Six of the 18—Baltimore, Kansas City, Minneapolis,
Houston, San Diego and San Francisco were the only three markets to see increases in vacancy, with Houston and San Diego also reporting negative absorption. San Francisco was the only market where net absorption decreased, although still on the positive side, while simultaneously experiencing an increase in vacancy.
Rental rates increased in 16 of 21 markets measured, compared to 14 in Q1. Boston, Chicago, Houston, Seattle/Puget Sound and St. Louis all reported decreases in their average asking rents.
Ten markets saw an increase in office construction in Q2 2016, which is similar to the eight markets that showed an increase of construction at the end of Q1 2016, indicating steady and consistent growth. Dallas/Fort Worth, Houston,
Ten markets saw an increase in office construction in Q2, compared to eight that saw increases in Q1. Dallas/Fort Worth, Houston,
“The landscape for commercial real estate in the US office sector continues to grow and present investors with interesting opportunities,” says Jay Olshonsky, president of NAI Global. “With net absorption and rental rates increasing, coupled with vacancies trending downward in the majority of the largest US markets, it is evident that the current environment for the US office sector is heathy and remains poised for continuous growth.”
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