3rd Quarter Market Reports, National Office Trends
Well, the Dog Days of Summer have given way to changing leaves and thoughts of holidays in the near future. And with that departure of hot weather, we begin to get a glimpse of what the 3rd quarter brought those in the commercial real estate industry.
This is the first in a series of reports that we will be posting on both local and national trends in the office, industrial and biotech sectors. We will also give you some “boots on the ground” analysis and what the figures mean, so make sure to stay tuned in. Our first report comes out of CoStar and their national perspective on the office market. Their findings seem to trend in the same way as our local Bay Area market, albeit on a slightly slower scale, especially when you consider the red hot Silicon Valley area. Surprisingly, according to CoStar, although net absortption is positive, there was actually a slight decrease in average asking rental rates. I suspect, although I haven’t seen a local report yet, that Peninsula figures will have risen due to the decrease in available Class A space.
Here’s the report:
The U.S. national office market ended the third quarter 2011 with a vacancy rate of 12.5%, down slightly from the 12.6% reported at the end of the second quarter 2011 and 12.7% in the end of the first quarter.
Net absorption for the overall U.S. office market was positive 23.7 million square feet in the third quarter, up significantly from positive 9.4 million square feet in the second quarter 2011. Vacant sublease space decreased in the quarter, ending the quarter at 52.6 million square feet.
Tenants moving out of large blocks of space in 2011 include AT&T Wireless moving out of 376,350 square feet at Cobalt Center in Atlanta, and Deloitte moving out of 295,136 square feet at 50 Fremont St. in San Francisco. Tenants moving into large blocks of space in 2011 include Facebook moving into 1 million square feet at the new Menlo Park campus in the San Francisco market, and Northrop Grumman moving into 328,851 square feet at Park Tower in the Washington, DC market.
The average quoted asking rental rate for available office space, all classes, was $21.30 per square foot per year at the end of the third quarter 2011 in the U.S. market area, a 0.1% decrease from the end of the second quarter.
A total of 182 buildings delivered to the nation-wide market in the quarter totaling 7 million square feet, with 50.7 million square feet still under construction at the end of the quarter including the 3-million-square-foot One World Trade Center in New York City.
Stay up to date on local and national trends with the Industrial Pros. Our coveted Kidder Mathews reports are soon to follow…
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