By Ken McCarthy, Principal Economist, Applied Research Lead
Robust job growth spurred continued strong demand for commercial real estate office space in most markets across the U.S., according to our recently released MarketBeat Report for year-end 2015. With demand exceeding new supply, net absorption increased and vacancy rates ticked downward. In fact, the overall national vacancy rate fell to its lowest level since the second quarter of 2008, and vacancy rates declined from year-ago levels in 69 of the 87 office markets tracked. CBD markets saw faster decreases than suburban areas.
Weighted average asking rents increased from year-ago levels in 72 of the 87 office markets tracked. For the U.S. as a whole, average asking office rents rose by 4.2% to end the year at $28.15 per square foot (psf). Rents in CBD markets reached the highest levels ever recorded.
The core of the U.S. economy remains on solid footing, though the volatility in the global economy is a concern. With the pipeline of new construction still relatively lean and the leading indicators pointing to further job creation, vacancy will continue to tighten and rent growth to accelerate in 2016.
For more information about 2015 and our expectations for the 2016 office market, click here to download the full report.
Ken has been with Cushman & Wakefield since August 2006. As Principal Economist, he works with the Chief Economist on Cushman & Wakefield’s U.S. economic position and presents it to the public. As Applied Research Lead, Ken is responsible for preparing cutting edge research about the outlook for commercial real estate in the Americas.
Be sure to follow Ken’s latest economic updates @KenMcCarthyecon