Office leasing activity across the nation advanced in the first quarter, with tenants absorbing 5.2M SF, up from the negative 406K SF absorbed during the same period last year, Newmark Knight Frank reports.
Rents and vacancy rates in the 56 markets Newmark tracks remained stable, with average rents increasing modestly by 2.9% to $27.68 and vacancies inching down 10 basis points to 13.5% compared to the year-ago quarter.
"The national economy is expanding steadily, but the share of new jobs that is office-using is decelerating. As a result, the U.S. office leasing market is experiencing only modest growth," NKF Senior Managing Director of National Research Sandy Paul told Bisnow. "Office absorption strengthened during [the first quarter] compared with the same period in 2017, but softened compared with [the fourth quarter]. The vacancy rate is edging down and now stands at 13.5%."
Office demand across the country has rebounded this year after employers held off closing deals most of 2017 amid concerns over how President Donald Trump’s policies would impact the market. Newmark posits strong demand for new high-end supply and trophy assets will help absorb the more than 11M SF that was delivered during the first quarter.
New supply in the pipeline for this year now sits at 84.2M SF. Fears of an impending global trade war have stirred concerns about higher construction costs and builders’ ability to get future projects off the ground and completed on schedule, Newmark reports.