Cushman & Wakefield U.S. Office MarketBeat report projects a 34th consecutive quarter of positive absorption in the U.S. office markets, with asking rents trending higher. This upward trend began in early 2011 with U.S. office average asking rents reaching a record high of $31.97 square feet in the first quarter of 2019. The national average for rent is up 3.9 percent since the same time last year. Since 2011 the national average market rent has increased 29.7 percent in 70 of the 86 markets Cushman & Wakefield tracks.
U.S. Economy Expected to Remain Steady in 2019
“Looking ahead, U.S. economic activity is expected to remain steady in 2019, which should lead to stronger leasing volume and net absorption as we progress through the year,” said Ken McCarty, Cushman & Wakefield Principal Economist and Americas Head of Applied Research. “Although, vacancy may tick up slightly due to the rising volume of construction, asking rents are likely to continue to rise steadily, especially in tighter markets. We expect the tech sector to remain the largest lessor of space for the balance of the year, in addition, financial services and coworking should post steady growth as well.”
Asking rents were highest in the Northeast during the first quarter of 2019 with three Manhattan markets in the lead: Midtown South at $80.62 per square foot (psf), Midtown Manhattan at $75,42 psf, and downtown Manhattan at $63.27 psf. Northern California was also among the most expensive: San Francisco at $77.26 psf and San Mateo County at $60.67 psf. Markets with the strongest rent growth were located in the high-tech markets, including Midtown South Manhattan with 16.6 percent growth, Silicon Valley with 10 percent grown, San Francisco with 8.2 percent growth and Raleigh/Durham with 8 percent rent growth.
New Construction Remains Concentrated in Strong Office Markets
New construction continues to be concentrated in office markets with strong growth and asking rents. Midtown Manhattan leads the way in new construction (14.5 million square feet under construction) followed by Silicon Valley at 6.6 million square feet, Chicago (5.0 million square feet), and Nashville (5.0 million square feet under construction). The top ten markets with new office construction include those five, plus San Mateo County, Charlotte, Boston, Seattle, and Atlanta. These 10 locations encompass 48 percent of all new construction in the nation.
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