The office market is “overwhelmingly strong” at the moment, according to new data presented by the CoStar Group.
U.S. office net absorption reached 101 million square feet in 2015 for the first time since the Great Recession. The national office vacancy rate fell another half-percentage point in 2015 as demand rose and there were fewer spaces available in nearly every metro area, the CoStar Group reports.
The U.S. office vacancy rate dropped from 11.3 percent in 2014 to 10.8 percent in 2015. CoStar Group researchers predict that the office vacancy rate will drop to about 10 percent by 2017.
“With the momentum in the market, I’m sure the next quarter will also be strong,” says Hans Nordby, managing director of CoStar Portfolio Strategy.
The markets showing the largest vacancy decreases were Atlanta, Miami, and Nashville.
“Each showed larger vacancy decreases than San Francisco, Seattle, and Boston, demonstrating a momentum shift in office market strength from the technology and energy metros that have driven the economy’s recovery and expansion to markets that suffered during the recession era housing bust,” CoStar Group notes in its report.
Eight of the 13 markets with the highest year-over-year changes in the occupancy rate are not from energy or technology sectors – a contrast to last year, says Nordby.
“Big tenant markets like Atlanta and Dallas are doing well. It’s their turn,” Nordby says.
