Demand for office space shown to be outpacing construction growth.
Three-quarter of the U.S. saw commercial office rental rates rise in the third quarter of 2015, according to a new report. The research by Cushman & Wakefield, a real estate services firm, shows that in spite of American office markets absorbing just 19.2 million square feet of space in 2015’s third quarter, a 12.6% decline from Q3 2014, increasing demand has pushed vacancy rates down by 10 basis points, dropping to 14.1% in the third quarter of 2015.
Total office rents increased by 3.1% in the third quarter compared to one year ago, which is the highest quarterly gain since rents peaked in 2008, with rents rising in 60 out of 80 tracked metropolitan areas. Additionally, new office construction kept pace with the growing demand, with 107.5 million square feet of new construction in 2015’s third quarter, an increase of 25% from one year ago. The report shows that the West was the largest beneficiary of rising rents, seeing 6% growth and 7.3 million square feet of new construction, while Southern and Northeastern office rents rose by 2.3%, and Midwestern office spaces saw value gains of 1.1%.
