US Office Sector Steady During First Quarter, Bodes Well for New Construction: JLL

By Patricia Kirk

U.S. office market performance in the first quarter of 2019 showed resilience, with roughly 14 million sq. ft. of absorption and dropping vacancy, despite increasingly cautious economic sentiment, reports real estate services firm JLL.

Even with the delivery of 6.8 million sq. ft. of new office space to the market, vacancy dropped 30 basis points during the quarter to 13.0 percent, and asking rents rose 3.2 percent year-over-year, mostly due to expensive new space coming on-line, according to a Newmark Knight Frank’s first quarter 2019 National Office Report.

But with 110.4 million sq. ft. of new space under construction, according to JLL’s office report, and a slowing marketplace, leasing activity is unlikely to keep up with new office supply delivered over the next couple of years. As a result, vacancy is expected to rise, especially for older office product, as some tenants move to new office space.

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