It seems as though it has been a couple of weeks of good news for the US office space market. CoStar has just come out with their State of the U.S. Office Market: Mid-Year 2010 Review & Forecast.According to their study, office space vacancy rates have stabilized and office vacancy rates that appear to have peaked and are no longer on the rise .
A few notable points from the report:
Office job growth has spurred positive net Office Space absorption. Office Vacancy Rates have peaked with some office markets even reporting Increases in average office Rents.
Of the 20 largest office markets, eight of them posted positive net absorption so far this year, three of them had little or no change, but nine did post negative net absorption. Washington DC led the country with 2 million square feet of net absorption followed by Denver with 1.6 million and Minneapolis with 1.3 million. New York City had 2.8 million square feet of negative net absorption, Los Angeles with a negative 2 million and Philadelphia at negative 1 million. But even the markets experiencing negative absorption were doing so at much reduced levels compared with last year.
New York, Long Island and Minneapolis office space markets are all now reporting single-digit office space vacancy rates of 9% or less.
If the current pace of office space absorption and delivery trends hold, CoStar projects the office vacancy rate will go from 13.6% to less than 11% sometime in 2013.
From a commercial real estate perspective, as long as you have any net job growth, it is eating away at the vacancies out there. The most important thing here is that this positive employment growth in the office sector will be reducing standing inventories of (available) space.