U.S. Office Market Sees Leasing Activity Increase, Vacancy Decline in 3Q
14 Oct, 2010, New York
Cushman & Wakefield today released third quarter 2010 statistics for the U.S. office market that show an increase in leasing activity for U.S. central business districts (CBDs), as vacancy rates continue to decline.
Year-to-date leasing activity for U.S. CBDs totaled 45.5 million square feet at the end of the third quarter of 2010, a 31.6 percent increase from the 34.6 million square feet leased at this time last year. Of the 30 CBDs tracked by Cushman & Wakefield, 18 saw year-over-year increases in leasing activity, with the most significant increases in Midtown South Manhattan (179.1 percent increase), Denver (120 percent increase), Westchester County, N.Y. (88 percent increase), Philadelphia (79.8 percent increase) and Midtown Manhattan (67.3 percent increase).
The rise in leasing activity led to declines in vacancy in most markets. After reaching a high of 15.0 percent at the end of first quarter of 2010, the overall U.S. CBD vacancy rate continued its decline for the second consecutive quarter, ending the third quarter at 14.7 percent, down from 14.8 percent at midyear 2010. Fifteen of the CBDs tracked by Cushman & Wakefield saw quarterly declines in vacancy, with the largest quarter-over-quarter declines in Portland, Ore., which declined to 11.6 percent from 13.3 percent; Orlando, Fla., which declined to 18.8 percent from 20.0 percent; Washington, D.C., which declined to 13.3 percent from 14.3 percent; Dallas, which declined to 29.1 percent from 30.1 percent; and Miami, which declined to 19.6 percent from 20.3 percent.
The overall rental rate for U.S. CBDs remained unchanged quarter-over-quarter. The majority of the CBDs saw modest quarterly increases in rental rates, with Oakland, Calif. (6.9 percent increase), Fairfield County, Conn. (3.4 percent increase), Downtown Manhattan (3.4 percent increase), Philadelphia (3.0 percent increase) and Washington, D.C. (1.9 percent increase) charting the highest increases.
"While the U.S. office market has seen some improvement, the full recovery - from trough to peak - will be gradual, mirroring the U.S. economy's recovery," said Maria Sicola, executive managing director and head of Americas Research for Cushman & Wakefield.
The year-to-date absorption rate, a measure which indicates the net change in occupied space, was negative 1.25 square feet at the end of the third quarter. While this represented a 64 percent quarterly decrease in absorption from negative 441,498 square feet at midyear, year-over-year absorption increased 96 percent from the negative 32.1 million square feet at the end of the third quarter of 2009.
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