By Kevin Thorpe, Chief Economist, Americas
Yet again in 2015 we saw weakness in the first quarter followed by stronger growth in the second quarter. Although most of the headwinds from low oil prices are behind us—investment in oil and gas exploration fell drastically in the first quarter—job cuts in energy-related sectors continue to mount.
Nevertheless, nonfarm employment rebounded in May and June, registering a combined gain of 477,000 net new jobs, exactly one-third of which are in office-using sectors. The number of job openings currently exceeds the number of hires, with 5.4 million positions waiting to be filled, and one-fifth of those openings are in business and professional services—a sign that more job growth is on its way.
Some of the latest trends and findings in the office sector include:
- Net absorption reached 20.4 million square feet (msf), nearly doubling the 11.4 msf absorbed in the first quarter of 2015.
- The vacancy rate fell 20 basis points (bps) to 14.2%, down from 14.4% last quarter, while second quarter asking rents reached $22.92 per square foot, up from $22.32 in the second quarter of 2014. Of the 80 metros tracked, 57 reported rental rate increases in the second quarter.
- Construction volume surged to 108.5 msf after hitting 98.5 msf in the first quarter.
Be sure to read our full Q2 U.S. Office Trends Report and watch the video below for an overview.
As Chief Economist, Kevin is responsible for overseeing the Research Department in our major regional offices as well as focusing on national commercial real estate trends and forecasts. Kevin’s group produces studies and statistics on topics affecting the national and local economy, capital markets, finance, leasing fundamentals, property and project management and factors that affect supply-demand fundamentals in commercial real estate. Kevin has developed several econometric models to predict market trends, has authored numerous studies and survey reports and was the 2014 recipient of the National Association for Business Economics’ (NABE) Outlook Award.