Cushman & Wakefield: U.S. Office sector rebounds in second quarter 2017

Cushman & Wakefield: U.S. Office sector rebounds in second quarter 2017

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Chamber Member News Post Date: 07/24/17 Source: Cushman & Wakefield By: Cushman & Wakefield
Summary

After a couple of lackluster quarters, the U.S. office sector rebounded in the second quarter in terms of net occupancy growth, according to Cushman & Wakefield. Nationally, rents continued to ascend to a new high, however, rising construction levels slowed the appreciation rate in most markets.

In the second quarter, absorption, the net change in occupied space, increased to 12.8 million square feet (msf), up from 6.3 msf in the first quarter and the highest level since the third quarter of 2016. In the first half of 2017, a total of 19.1 msf has been absorbed, roughly 60% of the pace of the first half of 2016. Of the 85 markets tracked by Cushman & Wakefield, 66 reported positive net absorption of office space, while 19 reported declines.

Kevin Thorpe, Cushman & Wakefield’s Chief Economist, says businesses remain confident enough to continue to expand their real estate needs.

“The labor market still has legs is the bottom line,” Thorpe said. “Even eight years into the cycle, office-using job creation remains healthy and solid in most markets. Moreover, the leading indicators, such as job openings, suggest that business expansion will remain healthy, and by extension, so will demand for office space.

“However, we have blown past full employment in certain cities, which means job growth is going to slow in certain spots and accelerate in others as businesses broaden their search for talent,” Thorpe continued. “This trend is becoming quite clear when we study this quarter’s office metrics. Secondary markets have a bit more labor slack and are now mostly powering the country’s absorption figures.”
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