U.S. office market picking up, says Jones Lang LaSalle

by Shane Henson — November 1, 2013—The third quarter 2013 marks the first time in seven years that the U.S. office market can look more confidently toward 2014 with leasing activity, expansion and pricing picking up at a faster, more sustainable rate across the nation, according to Jones Lang LaSalle, a global professional services and investment management firm.

The firm’s recently released United States Office Outlook – Q3 2013 report points to several confidence-building market moves:

  • Office rents are up, and concessions are down—even in secondary and tertiary markets—turning the office market into landlord-favorable territory.
  • Quarterly rent growth of 1.4 percent was the highest quarterly jump of the recovery, annualizing at a rate of 5.6 percent.
  • Absorption levels continue with the 14th consecutive quarter of occupancy growth, the last two quarters above historic norms.

Other significant findings from the report:

  • Investment Sales: Sales activity rose across the United States compared with second quarter 2013, with an intense amount of foreign interest in New York, Chicago, Los Angeles and Washington, DC. Houston also saw an increase in sales activity given the local energy and tech industry growth, while Los Angeles’ four large sales reflected the slow-but-steady capital markets recovery.
  • Healthcare: The growing healthcare sector is adding tenant requirements in markets all over the United States. This has been particularly noticeable in markets ranging from Boston to Baltimore to Florida to Phoenix to Sacramento, in line with the increasing demand from “eds and meds” employment and health care reforms.
  • Market Standout—Phoenix: Driving the Sunbelt’s recovery, Phoenix experienced a number of very large leases, including a two-million-square-foot commitment in a new development, and a 135,000-square-foot deal by a financial service firm.