The nation's office space vacancy rate dropped to 17.1% in the third quarter, according to new data released by Reis Inc. This is down from 17.4% in the second quarter and is the lowest level since the 17% rate recorded in the fourth quarter of 2009.
San Francisco led the nation with top growth in office rents, registering a 4.1% increase in the third quarter. New York came in second at 3.5%. Three cities – Dayton, Ohio; Omaha, Neb.; and Palm Beach, Fla. – tied for the lowest quarterly office rent performance, each declining by 0.3%.
However, Reis warns that the market remains precarious.
‘Although this is the eighth consecutive quarter of positive asking and effective rent growth, the pace of improvement remains painfully slow,’ says Ryan Severino, senior economist at Reis. ‘Many of the jobs being created are in sectors that do not generally utilize office space.’
Severino adds that continued concern about high unemployment continues to keep the sector from progressing further.
‘The office market is not going to move in the right direction until the labor market starts to move in the right direction,’ Severino says. ‘Nobody is going to lease space until they're hiring, and nobody is going to hire until they feel more confident about the direction of the economy.’
