U.S. Office Market Outlook | Q1 2016

by CoyDavidson on May 25, 2016

US Office Market Outlook Colliers International q1 2016

Office Market Fundamentals Remain Positive to Start 2016

Colliers is pleased to release its Q1 2016 U.S. Office Market Outlook report. The report explores how a strong U.S. economy is contributing to job growth and increased demand for office space. It’s expected that the U.S. office market will continue to expand over the next couple of years. Vacancy rates continue to decline while absorption remains positive and Class A asking rents in both the CBD and suburban areas post healthy annual increases.

iStock_000007001593Small

“The U.S. economy has continued its moderate growth while both occupancy and asking rents have continued to trend upwards,” said Cynthia Foster, President of National Office Services. “There is still room for gains in many markets that have not yet matched or surpassed their prior peak in asking rent or trough in vacancy.”

In Q1 2016, economic indicators remained positive. Interest rates have remained low, the extreme volatility in the financial and commodities markets has moderated and job creation continued a long streak of robust gains. Those solid results have translated to strong performance in the office sector. Vacancy rates continued to decline, absorption remained positive and Class A asking rents in both the CBD and suburban areas posted healthy annual increases.While sales volume decreased, pricing has remained elevated as the inventory of top quality assets available has diminished. While sales volume decreased, pricing has remained elevated as the inventory of top quality assets available has diminished.

Key Observations:

  • Though the year began with volatility in the financial markets, the strong employment numbers give reason for continued optimism. The U.S. is experiencing the longest consecutive string of monthly job gains on record, with an average of over 200,000 jobs added monthly for five consecutive years.
  •  The office market continued to strengthen in the first quarter as the national vacancy rate declined 10 basis points in the quarter to 12.6%, a full 100 basis points lower than a year ago. Most markets participated in the improvement, with 80% of metros registering stable or declining vacancies.
  • Absorption (9.5 MSF) moderated from the robust occupancy gains seen at year-end 2015, though it is in-line with historical first quarter numbers. The pace of absorption is expected to increase throughout 2016, though it may not reach the record totals seen in the past two years due to vacancy constraints.
  • Class A asking rents remain strong in both CBD ($46.19) and suburban ($28.96) areas of the U.S., posting gains of 8.9% and 3.7%, respectively, over the last year. The largest year-on-year gains were seen in the tech-centric San Francisco Bay area and Midtown South in Manhattan, as well as Atlanta and Dallas.

Click here to download the report as a PDF.

You might also like:

Subscribe to my posts via e-mail: here

{ 0 comments }

U.S. Industrial Market Report | Q1 2016

May 18, 2016

U.S. Industrial Vacancy Lowest in Over a Decade Colliers International has released its Q1 2016 U.S. Industrial Market Outlook report. The report examines how the market continues to improve with lower vacancies, robust occupancy gains, and a record amount of new construction to quench increased demand from occupiers looking to modernize and improve their logistics […]

Read the full article →

Texas Office Market Update | Q1 2016

May 12, 2016

Texas Office Markets Cool Off but Remain Healthy Here are the Colliers International first quarter 2016 Office Market Reports for the Austin, Dallas-Fort Worth and Houston markets. Austin After a major spike in the second half of 2015, Austin’s citywide positive net absorption decreased in Q1 2016 to 290,047 square feet. Three buildings totaling 321,024 […]

Read the full article →

Houston CRE Market Reports | Q1 2016

May 12, 2016

The State of the Houston CRE Market Here are the Colliers International | Houston first quarter 2016 Market Reports for the office, industrial and retail sector. Office Houston is home to most major energy companies and its economy and real estate market can be positively or negatively affected by the price of oil. Houston’s Q1 […]

Read the full article →

DFW Office Market Report | Q1 2016

May 12, 2016

Strong Job Growth Propels Construction, but Vacancy Rate Leveling Off Despite the mild winter, the Dallas-Fort Worth office market experienced a bit of a cool down in 2016. The market saw a substantial slowdown in net absorption, down 67% from 2015, but leasing activity was only down slightly from a year prior. Record construction continues […]

Read the full article →

Disclaimer: All blog entries on this site are the opinion of the author and not those of either Colliers International - Houston or Colliers International (collectively, "Colliers"). Colliers neither endorses, sponsors nor necessary shares the opinions of the author, regardless of whether any blog is posted by any employee, officer, agent, or representative of Colliers. Colliers has not authorized or verified any statement of fact made in a blog, and any such statement does not constitute a statement of fact by Colliers. Colliers is not responsible for the monitoring or filtering of any blog, nor does Colliers claim ownership or control over any blog content.