Average U.S. asking rents for office space increased 1.7% over the six-month period ending in June, to $36.44, according to a new report from Yardi® Matrix. National vacancy rates fell 20 basis points from the previous month, to 13.5%.
Demand for office space remains strong, as office-using employment sectors grew 1.7% year-over-year, slightly above the 1.5% rate for all employment.
With 26.5 million square feet delivered year-to-date and an additional 174.7 million square feet under construction, the supply pipeline shows no sign of slowing down.
Half of all space under construction is in six top gateway markets—Manhattan, N.Y., San Francisco, Washington, D.C., Boston, Los Angeles and Chicago—and growing tech markets Seattle, the Bay Area and Austin, Texas.
Transaction volume accelerated in the second quarter, with $38.8 billion of sales completed through June. If the momentum continues, activity would be on track to finish near last year’s total volume of $91.1 billion. ”The decline of the 10-year Treasury yield, which has hovered in the low-2.0% range since the beginning of June, should continue to act as a catalyst for transactions,” the report says.
Half of all space under construction is in six top gateway markets—Manhattan, N.Y., San Francisco, Washington, D.C., Boston, Los Angeles and Chicago—and growing tech markets Seattle, the Bay Area and Austin, Texas.
SEE ALSO : U.S office asking rents up, sales activity slows in Q1 2019, says Yardi Matrix
San Francisco (18.8%), Brooklyn (11.2%) and the Bay Area (10.0%) led the nation in overall year-todate asking rate growth. On the other end of the spectrum, nine of the top 25 markets tracked by Yardi Matrix have seen average asking rates decline over the six-month period, led by Boston (-3.6%), Seattle (-2.6%), Chicago (-1.8%) and Miami (-1.6%).
More information about U.S. office property demand, deliveries, lease rates, construction and sales is available in the national office report for July 2019.
