The US office market has lagged behind other commercial property sectors, but is picking up speed as the economy improves and the job market gets stronger. The tech industry has been responsible for driving a lot of its strength. In locations where tech companies are moving, office markets are gaining ground.
According to CBRE’s latest office market study, tech accounted for 19 per cent of the largest US leases last year. This figure was up from 13.6 per cent in 2013.
The tech industry has become an important driver in rising office-market fundamentals in “all regions of the country,” according to Sara Rutledge, research and analysis director at CBRE.
Ms. Rutledge went on to say that tech accounted for 14 per cent of all leasing activity in the Midwest last year, putting it in the No. 2 spot behind healthcare and life sciences.
San Francisco’s office market is on track to improve the most in 2015, according to Marcus & Millichap, and the US capital for technology also has the strongest supply and demand fundamentals.
Tech firms in San Francisco occupy a significant level of space in the city’s financial district along with South of Market, the South Beach area and the Mission District.
Dallas and Fort Worth saw more than 40,000 new office jobs last year in various fields, according to CBRE.
Six Florida markets are showing improving strength this year, according to Marcus & Millichap’s office report. Miami moved up four places on the office index to No 7, and Tampa-St. Petersburg jumped up by six notches to No. 24.
Other rising office markets in the state include Fort Lauderdale, Jacksonville, Orlando and West Palm Beach.
Manhattan, which is usually associated with Wall Street and financial services, has attracted a number of tech companies looking to expand over the past year or so, including Google and Amazon. Samsung plans to lease up to 1 million sq ft of additional space, according to Marcus & Millichap.
Office-using sectors added 407,100 jobs in the United States last year, representing a 2.4 per cent gain over the previous year, to 17.2 million, according to CBRE. This is a gain of 2 million more office jobs than the cyclical low hit in 2009.
Nationwide, net absorption of office space (52.7 million sq ft) was at the highest level since 2007. CBRE is projecting that the rate will moderate over the next few years to about the 42 million sq ft per year level, which is closer to the historic average.
