USA: CBDs record highest decrease in vacancy rates since 2007

13 Jul, 2011, Frankfurt

• Strongest half-year since 1998
• 3.8 million m² office space newly leased
• Low volume of constructions completed

Cushman & Wakefield New York (C&W) has just published the half-yearly results for the major US office markets. According to the report, in the second quarter the Central Business Districts (CBDs) recorded the largest quarterly decline in vacancy rates since 2007. The overall average vacancy rate in CBDs fell to 13.9% (down 0.7 percentage points from the end of the first quarter 2011). The first half-year shows declining vacancy rates in 71% of the office markets investigated. The markets with the greatest drops in vacancies include Miami, Midtown South Manhattan and Washington, D.C. The trigger for this trend was an increase in leasing activity: leasing volumes for the first half of 2011 are up 43.9% from midyear 2010 levels. With 3.8 million m² in new office leases signed since the start of the year - in the second quarter alone approximately 2.2 million m² in leases were signed - this half-year has been the strongest in terms of leasing activity since 1998, when 4.1 million m² were let.
"In the first half of 2011 there has been more leasing activity than at midyear 2006 and 2007 - two extremely strong years", said Inga Schwarz, Head of Research at C&W in Germany. "If this continues, we will be on track for a historic year."

With no new constructions completed in the CBDs in the second quarter, year-to-date construction completions are recorded at a total of approximately 213,700 m². An additional 195,000 m² of new office space is expected to be completed by year-end, with projects underway in Washington, D.C., Houston, Miami and Portland.

Whereas the market posted negative absorption at mid-year 2010, absorption was positive and increasing for the third consecutive quarter: approximately 659.600 m² have been absorbed in the year to date.

Vacancy rates in US CBDs at the end of the first half of 2011

Central Business District (CDB) in	Vacancies
New York Midtown South Manhattan	7.1 %
Portland, Oregon	9.6 %
New York Downtown Manhattan	9.7 %
New York Midtown Manhattan	9.8 %
San Francisco	11.0 %
Washington, D.C.	11.5 %
Philadelphia	12.3 %
New Haven, Connecticut	13.7 %
Denver	14.2 %
Boston	14.6 %
National average	13.9 %

Source: Cushman & Wakefield, New York

The highest average rentals in the first half of 2011

Central Business District (CDB) in	Average gross rent USD/m²/month
Midtown Manhattan	56.82
Washington, D.C.	44.85
Midtown South Manhattan	40.03
Fairfield County, Connecticut	36.97
New York Downtown Manhattan	35.32
San Francisco	34.94
Boston	34.63
Miami	32.59
Los Angeles	30.87
Palm Beach, Florida	30.81
National average	32.17

Source: Cushman & Wakefield, New York

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