by Brianna Crandall — May 23, 2018 — In its latest national report, commercial real estate firm Transwestern revealed that the US office market showed continued growth over the first three months of 2018 (Q1) as vacancy remained stable for the sixth consecutive quarter. Direct and overall (sublet) vacancy ended the quarter at 9.7 and 10.3 percent, respectively.
From a real estate standpoint, overall, 22 of the 48 Transwestern reporting markets registered improvements in office direct vacancy (i.e., more offices occupied) while 30 of the markets recorded increases in overall vacancy (direct and sublet) over the period.
Stuart Showers, director of Research for Transwestern’s Houston office, pointed out:
Although well below both three- and five-year running quarterly averages, net absorption in the office sector for the first quarter of 2018 slightly outpaced the five-year average first-quarter performance of 14 million square feet. As a result, average asking rental rates continued to climb at a modest pace.
For office space, the first-quarter national average asking rental rate of $25.66 per square foot marked the 20th consecutive quarterly increase.
Continued restraint in the development of new office product (i.e., less new construction) helped the sector. After cresting at 147.6 million square feet a year ago, the construction pipeline has begun to recede, with early 2018 marking the fourth straight quarter of declines. New York; Dallas-Fort Worth; Washington, DC; and Seattle led the 141.1 million square feet of new construction starts in the first quarter (Q1) of 2018.
When examining vacancy and rent growth by market, we see a number of metros still in a stage of recovery or market correction for a variety of reasons. But these are more than offset by metros we consider stabilized or peak performers.
Download the Q1 national office market report from the Transwestern website.
Transwestern leverages market insights and operational expertise from members of its family of companies specializing in development, real estate investment management, and research. Based in Houston, Transwestern has 34 US offices and assists clients through more than 211 offices in 36 countries as part of a strategic alliance with BNP Paribas Real Estate.