United States of America Office MarketView Q1 2014
- U.S. economic growth for 2014, as measured by headline GDP, is tracking just above 2.5% as headwinds have eased both at home and abroad. Job growth is averaging roughly 190,000 new hires per month, and the U.S. labor market is close to a full recovery in employment.
- Office leasing activity and net absorption cooled during Q1 2014, but still outpaced supply. 5.0 million sq. ft. of positive net absorption during Q1 2014 is the country’s best first-quarter performance since Q1 2007.
- The national vacancy rate inched down 10 basis points to 14.8%. The lull is typical of Q1 results recently and the market remains fundamentally healthy.
- The national average asking lease rate rose 1.7%, due in large part to the strong performance of downtown submarkets.
- Just 3.6 million sq. ft. of new office space was added to during Q1 2014, as supply remains constrained and limited to select growth markets that have fundamentals favorable to development. Ten markets—mostly high-tech centers and energy hubs—account for two-thirds of anticipated deliveries through 2017.
As the U.S.-wide office vacancy rate approaches its equilibrium level later this year, expect a more robust and sustained rent recovery to materialize.