The U.S. office market showed signs of a modest recovery in the second quarter, according to a new report from Colliers International. However, a sluggish national economic recovery, concerns about the debt ceiling prior to reaching this week's agreement, and a sudden halt in job creation have restrained demand for office space, say the researchers, who forecast an uneven and ‘fairly volatile’ recovery for the sector.
The Second Quarter 2011 North America Office Highlights report shows that office vacancy rates were essentially flat, dropping ever so slightly quarter over quarter to 15.28%. The U.S., meanwhile, registered 9.9 million square feet of positive net absorption – the fifth consecutive quarter of rising occupancy. That is more than double the first-quarter numbers, when occupied space grew by only 4.2 million square feet.
New York; Washington, D.C.; San Francisco; and Seattle lead the pack in terms of office demand, Colliers International says. Other markets experiencing modest gains in occupancy include Boston; Dallas; Raleigh, N.C.; and Philadelphia.
Widespread rent increases, however, are unlikely to occur this year, and they may not materialize until well into next year, the Colliers International says.
‘The national office market has been improving overall, and though the recovery has slowed of late, the long-term indicators are strong,’ says Dylan Taylor, CEO of Colliers International in the U.S. ‘Gateway cities like New York; Washington, D.C.; and San Francisco continue to drive the national real estate sector, with absorption gains strongest in those markets and a feverish appetite among investors from around the globe looking to acquire assets in these urban markets.’
