by Ann Withanee — February 11, 2011—The U.S. office market absorbed 14.8 million square feet of space during the fourth quarter, more than double the amount absorbed in the previous quarter, according to a new report on quarterly activity in the U.S. office market from Colliers International.
As occupancy improved, so too did investor sentiment as heavy demand for core assets in top markets like Washington, D.C. and Manhattan drove capitalization rates down into the low five percent range.
According to Colliers International’s Q4 2010 North America Office Highlights report, leasing fundamentals are snapping back noticeably as evidenced by the national vacancy rate that fell from 16.44 to 16.15 percent during the quarter.
Continuing a trend that began with the previous quarter, Washington, D.C., Manhattan and San Francisco held onto their lead as the nation’s strongest office hubs on the basis of vacancy and rental rates.
Net absorption refers to the amount of office space occupied at the end of a period minus the amount occupied at the beginning of a period. It also takes into consideration any space that was vacated during the period.
Much of the credit for this robust and broad-based recovery can be attributed to a steady uptick in office-using job growth. But a dearth of new office projects also has further tightened market fundamentals. Only 3.8 million square feet of new office space was introduced to the national market in the fourth quarter, down from the 5.5 million square feet in total delivered that was to the market just one quarter prior.
Additional data and research are available in the full report.
