Slow Recovery Benefits Office Landlords

LOS ANGELES—Demand for office space continued to improve in the first quarter, says CBRE Group, with eight out of 13 major metro markets seeing vacancy fall and average asking rents increase. “The US economic recovery is continuing to fuel demand for office space nationally; with relatively little new space coming on the market, landlords are seeing the pendulum of pricing power shift in their direction and are able to raise rents modestly in most major markets,” says Art Jones, senior managing economist at CBRE.

The fact that this recovery has occurred more gradually than many would have liked has worked in favor of ownership, writes Todd Lukasik, a senior analyst with Chicago-based Morningstar Inc. “Many have been longing for an increase in economic growth in the United States, but the slow and steady economic recovery has actually been very good for landlords, in our view,” he writes.