U.S. commercial real estate services provider, Cassidy Turley, reports that demand for office space in that country rose sharply in the second quarter of this year. It also stated that development of new office buildings is “accelerating.”
U.S. office markets absorbed 15.1 million sq ft of office space in the quarter, up 41 per cent from the previous three-month period.
Vacancy rates fell 10 basis points from 15.2 per cent in Q1 to 15.1 per cent in the second quarter. Vacancy is now 220 basis points lower than at the height of the recession, but it still higher than at pre-crisis levels.
According to the Cassidy Turley report, average asking rents in the U.S. rose 2.2 per cent compared to 12 months ago. This is the highest increase in close to five years. There was 73 million sq ft of new office space under construction as the second quarter came to a close, an increase of 34 per cent from one year ago.
Net absorption in the Northeast increased by 60 per cent from Q1. The West increased by 46 per cent, and the South was down slightly at 4 per cent.
The Midwest, after seeing a first quarter of only 396,000 sq ft in net demand saw an impressive rebound of over 490 per cent, showing over 2.3 million sq ft of net absorption in Q2.
The top ten strongest markets in the U.S. (with the number of square feet net absorption) is as follows.
In terms of rental growth, San Francisco leads the way with a 13.1 per cent year on year increase, followed by Houston on 10.5 per cent and New York with a 9.4 per cent appreciation.
