by Brianna Crandall — November 27, 2019 — A new Yardi Matrix report on the US office property market illustrates two major trends in new office supply:
- New office property supply is heavily concentrated in a handful of metros. More than half is in the Top 10 most active markets and almost 80% is in the Top 20.
- New supply is increasingly concentrated in urban submarkets, contrary to historical trends. Before 2018, suburban properties constituted at least half of new deliveries every year since the financial crisis of 2007-08. “This trend will continue, as only 31.3% of square footage under construction is in suburban submarkets,” the report says.
The Top 10 most active markets for new office property supply are:
- San Francisco
Meanwhile, average US office asking rates increased 1.4% year-over-year in September 2019, while national vacancy rates fell 10 basis points from the previous month. Expensive new listings drove increases in rate growth leaders San Francisco, CA; Tampa, FL; and Austin, TX.
Office transaction activity totaled $63.5 billion through the first three quarters of the year, lagging 2018’s total for the same period by $3.9 billion, as low interest rates failed to spur higher sales volume in the third quarter. Job growth in office-using sectors continues to outpace the overall labor market.
More information about lease rate and occupancy trends, sales activity and office-using employment, including close-up looks at Brooklyn, NY; Phoenix, AZ; and Austin, TX, is available in the Yardi Matrix national office report for October 2019.
Yardi Matrix offers comprehensive market intelligence tools for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, industrial, office and self-storage property types.
Yardi develops and supports investment and property management software for all types and sizes of real estate companies. Established in 1984, Yardi is based in Santa Barbara, CA, and serves clients worldwide.
The Yardi Matrix National Office Report for October 2019 is available for free download from the Yardi website, along with other Yardi Research and Publications covering multifamily, industrial, office and self-storage property types.