U.S. Office Vacancy Rates Remain Unchanged in Mid-2017
According to CBRE, vacant office space in the U.S. remained unchanged during the second quarter of 2017 at 13 percent. The steady performance was attributable to a balance of supply and demand.
The vacancy rate in suburban markets increased by 10 bps, to 14.3 percent, while downtown vacancy remained steady at 10.7 percent. Vacancy continued to fall in an about half of the U.S. office markets, and the national office vacancy rate remains near its post-recession low.
"The office market remained in equilibrium during the second quarter with supply and demand roughly in balance," said Jeffrey Havsy, Americas' chief economist for CBRE. "Absorption was in the 7 million sq. ft. range for three out of the last four quarters while supply growth has been between 10.5 million and 11.8 million sq. ft. the past four quarters. This steadiness has kept the overall vacancy rate near 13 percent over the past year."
The largest quarterly declines in vacancy were in Columbus (170 bps), Las Vegas (160 bps) and Albuquerque (130 bps). Louisville, Jacksonville, Norfolk, Honolulu, Orlando, Cincinnati and Atlanta each declined by 60 bps or more. Over the past four quarters, market conditions have tightened notably in mid-sized markets--including Tucson, Orlando, Las Vegas, Richmond, Sacramento, Albuquerque, Kansas City, Raleigh, West Palm Beach, Detroit and St. Louis.
"The market is in a very sustainable place with neither supply nor demand overheated, which bodes well for the health of the market over the next few quarters," added Mr. Havsy.