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Office Vacancy Declines In Major Markets In Q2 2013

Biggest Drops in Boston and Houston Office Markets

Continued Decline in Industrial Availability 

Los Angeles — June 26, 2013 — Office vacancy rates declined in most major U.S. markets during Q2 2013, according to preliminary data from CBRE Group, Inc. Ten of the 13 largest markets showed declines in office vacancy, led by Boston and Houston. Industrial availability* continued to decrease in major U.S. markets as well, according to CBRE. 

“Continued job growth and minimal new office development is leading to tighter conditions in most major U.S. office markets,” said Brook Scott, CBRE’s Interim Head of Research, Americas. “Stronger consumer confidence and a resurgent housing market are helping to strengthen industrial markets, but the sector still faces headwinds from a slowdown in economic activity outside the U.S.”

Office
In the major U.S. office markets tracked by CBRE, Boston and Houston recorded the biggest drops in vacancy during Q2 2013, both decreasing 50 basis points (bps), driven by the technology and healthcare sectors in Boston and by the energy sector in Houston. Washington, D.C. was the only major market to register an increase in vacancy, at 20 bps, with decreased activity by the federal government continuing to weigh on the market. Vacancy levels were unchanged in New York and Los Angeles, but decreased in the other major markets. Rental rates continued to trend higher and concessions remained stable in most markets due to moderate job growth.

Q2 2013 Preliminary Office Statistics

Market​
​Q2 2013 Prelim
Vacancy Rate
(%)
​Q1 2013 Final
Vacancy Rate
(%)
​Basis Points
Change

Atlanta​

21.8​

22.0​

-20​

Boston​

12.1​

12.6​

-50​

Chicago​

17.9​

18.0​

-10​

Dallas​

18.7​

19.0​

-30​

Denver​

13.6​

13.9​

-30​

Houston​

12.0​

12.5​

-50​

Los Angeles​

16.8​

16.8​

0​

Miami​

17.5​

17.7​

-20​

New York​

7.6​

7.6​

0​

Phoenix

23.6​

23.7​

-10​

​San Francisco

8.5​

8.7​

-20​

​Seattle

15.2​

15.5​

-30​

​Washington, D.C.

14.4​

14.2​

20​

Source: CBRE Research, Q2 2013.

Industrial
During Q2 2013, availability rates for most major U.S. industrial markets continued to decrease. At 100 bps, Miami had the largest decrease in availability rates compared with Q1 2013 as improvements to Port Miami attracted a number of large tenants. Atlanta had the second-biggest decrease, with a 50 bps decline, benefitting from its prominence as a distribution hub in the Southeast. Three of the twelve major markets—Los Angeles (up 50 bps), Phoenix (up 40 bps) and Northern New Jersey (up 20 bps) saw availability increase during this period. During Q2 2013 rents and tenant concessions remained steady, with the exception of a few markets including Dallas, Denver, Boston and Chicago, where rents are increasing due to diminished availability, particularly for Class A space. Demand for warehouse and distribution space remained high. Most construction activity, particularly for requirements greater than 500,000 sq. ft., remains built-to-suit for a particular tenant’s needs. However, speculative construction for new, multi-tenanted buildings is also on the rise.

Q2 2013 Preliminary Industrial Statistics 

Market​
​Q2 2013 Prelim
Availability Rate
(%)
Q1 2013 Final
Availability Rate
(%)​
​Basis Points
Change

Atlanta​

17.0​

17.5​

-50​

Boston​

19.7​

20.1​

-40​

Chicago​

8.7​

9.0​

-30​

Dallas​

13.1​

13.2​

-10​

Denver​

7.4​

7.3​

10​

Houston​

8.4​

8.7​

-30​

Los Angeles​

7.0​

6.5​

50​

Miami​

8.1​

9.1​

-100​

New Jersey Northern​

10.1​

9.9​

20​

​Phoenix

13.6​

13.2​

40​

​San Jose

12.6​

12.6​

0​

Seattle​

9.4​

9.5​

-10​

Source: CBRE Research, Q2 2013.

Note to editors/journalists:  To speak with a CBRE expert please email robert.mcgrath@cbre.com.

*Availability is space that is actively being marketed and available for tenant build-out within 12 months.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2012 revenue).  The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

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