August 06, 2019
Houston – Transwestern’s latest national office report reflects resilience in market fundamentals, even in the face of the moderating pace of U.S. economic growth demonstrated by net job creation averaging 172,000 per month for the first half of the year. In this environment, the national vacancy rate held steady at 9.7% in the second quarter thanks to healthy preleasing levels of newly delivered office assets.
“Signals continue to point to a disciplined office market that will perform well through year-end,” said Elizabeth Norton, Managing Director of Research at Transwestern. “Especially noteworthy is that in the second quarter, annual asking rental rates grew 4.2% year over year, the fastest rate this cycle and well above the five-year average of 3.4%.”
At quarter end, the average asking rental rate was $26.83 per square foot. Annual rent growth has been strongest in Tampa, Florida (10.6%), followed by Nashville, Tennessee (9.5%); San Jose/Silicon Valley, California (9.4%); Austin, Texas (8.8%); and San Francisco (8.8%).
Additionally, net absorption more than doubled to 24 million square feet in the second quarter despite sublet space adding 1.9 million square feet back to available inventory. Absorption leaders during the past year include Seattle; Charlotte, North Carolina; Dallas-Fort Worth; Los Angeles; and Northern Virginia. Seattle posted nearly 6 million square feet of absorption during the past 12 months, bringing the metro’s vacancy rate down to 6.1%, the fourth-lowest of the 49 markets tracked by Transwestern.
Office construction activity hit its highest level of this cycle, growing 9.6% during the prior 12 months. The second quarter saw more than 21.7 million square feet of new space added to inventory, and this pace will continue through the remainder of the year. Currently, 163.6 million square feet is in the pipeline nationally.
Download the full Second Quarter 2019 U.S. Office Market Report at: http://twurls.com/us-office-2q19
ABOUT TRANSWESTERN COMMERCIAL SERVICES
Transwestern Commercial Services (TCS) is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service and innovative client solutions. Applying a consultative approach to Agency Leasing, Asset Services, Occupier Solutions, Capital Markets and Research, our fully integrated global organization adds value for investors, owners and occupiers of all commercial property types. We leverage market insight and operational expertise from across the Transwestern enterprise, which includes firms specializing in development and real estate investment management. TCS has 34 U.S. offices and assists clients from more than 200 offices in 37 countries through strategic alliances with France-based BNP Paribas Real Estate and Canada-based Devencore. Experience Extraordinary at transwestern.com and @Transwestern.
The Transwestern enterprise comprises diversified real estate services, investment management and development companies. The privately held, fully integrated organization leverages competencies in office, industrial, retail, multifamily and healthcare to add value for investors, owners and occupiers of real estate.