Leasing – harbinger of recovery?

It’s hard to feel confident on a consistent basis these days when the stock market is so volatile, employment growth is weak and consumer and business confidence ebb and flow. But the strength in US office and industrial leasing is irrefutable – it’s in the books and these stats won’t be adjusted.

Office leasing is up 27.3 % from the same time last year and although the third quarter data isn’t in yet preliminary indications are that activity will be just as strong. The pace of leasing growth in the CBDs or central business districts is outpacing that in the suburbs.

National Office CBD & Non-CBD Leasing Activity

Activity has been fueled by a cross section of industries including professional and business services, information and technology firms and , naturally, finance and insurance. Will this momentum continue?

At the current pace, we expect office leasing will end 2010 ranging between 175 and 200 million square feet, an improvement over 2009 and much more like the activity seen during a recovery.

In the industrial sector, leasing is 25.6 % higher than a year ago.In industrial markets, increased US manufacturing and global trade are behind strong leasing growth in Atlanta, greater Los Angeles and the Inland Empire. On the flip side, inland markets like Dallas and Chicago are seeing a slower return to growth. In the next blog, I will take a closer look at industrial leasing and sales activity.

That will be followed by an overview and outlook on construction activity.  With limited supply, can upward movement in pricing be far behind? We’ll take a look at that in blog number four.

Maria Sicola,
Americas Research Group,
San Francisco

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