Washington, DC – According to Cassidy Turley, a leading commercial real estate services provider in the U.S., the national office sector continues a positive growth trend after bottoming in the first quarter of 2010.
Cassidy Turley reports that net demand for office space in the U.S. registered at +9.0 million square feet (msf) – the third straight quarter of improvement. In addition, vacancy rates inched down for the first time in over three years, and rents are stabilizing.
Kevin Thorpe, Cassidy Turley’s chief economist, is cautiously optimistic. “The sustained improvement in demand for space, now spreading beyond the largest metros, coupled with tightening vacancy is certainly encouraging. However, the employment situation does not inspire robust projections for 2011. The U.S. economy is on track to build on the growth in 2010, but the U.S. office sector is still a minimum of 18 months away from a balanced market.”
Mr. Thorpe adds, “The state of commercial real estate is largely linked to healthy labor markets. In 2010, the U.S. economy added 294,000 net new office using jobs (+366,000 Prof & Business Services, -72,000 Financial Services). Although the rate of hiring is better than the pace coming out of the past two recessions, the U.S. economy has a ways to go before it replaces the 1.9 million office-using jobs that were lost during the recession in 2008 and 2009.”
According to Cassidy Turley, the national office vacancy rate fell 10 basis points in the fourth quarter to 16.7% and average asking rents registered at $21.24, down 2 cents from the previous quarter. The report also shows that 5.3 million square feet of new office space was delivered in the U.S. office market and there was 30.3 million square feet under construction – indicating two more years of limited new supply.
“Without further setbacks in the economic recovery, vacancy will continue to recede in 2011 and even more so in 2012,” Mr. Thorpe continued. “Surging corporate profits remain the primary beacon of hope, as they typically correlate with strong job creation several quarters later. If this relationship holds true in this cycle, the U.S. should see better job creation by mid-2011.”
According to the report, U.S. office sales demonstrated noticeable recovery in 2010 compared to 2009. Investors are still focusing on core assets, but recent data reveals that demand is beginning to trickle beyond major metro areas. Moreover, a wave of new listings in October and November – more than double the pace from a year ago - suggest that investment sales are poised to extend this momentum in 2011.
The full report can be accessed here.
About Cassidy Turley
Cassidy Turley is a leading commercial real estate services provider with over 2,800 professionals in 60 offices nationwide. The firm completed transactions valued over $13 billion in 2009, manages over 420 million square feet on behalf of private, institutional and corporate clients and supports over 25,000 domestic corporate services locations. Cassidy Turley serves owners, investors and occupiers with a full spectrum of integrated commercial real estate services—including capital markets, corporate services, project leasing, property management, project and development services, and tenant representation. Outside of North America, Cassidy Turley has served the international needs of its clients since 1985. In 2010, the firm enhanced its global service delivery through its partnership with GVA Grimley. The firm recently ranked in the Top 10 on the Lipsey Co.’s Commercial Real Estate Top Brands Survey, and was ranked #1 by Real Estate Alert for Office Sales in 3 of the Top 6 Markets. Please visit www.cassidyturley.com for more information about the company.