Boston – February 22, 2011
– The U.S. office market vacancy rate is expected to fall to 16.1% by the end of 2011, a 30-basis-point (bps) improvement from previous forecasts, according to new analysis from CBRE Econometric Advisors (CBRE-EA). CBRE-EA’s latest forecast states that the office vacancy rate peaked in 2Q2010 at 16.7%, and will continue to slowly decline over the next two years, falling to 15.0% by the end of 2012.
"Positive net absorption, fueled by core office leasing in prime locations, led the rebound in 2010, and resulted in a far better year than anyone could have expected" said Arthur Jones, Senior Economist, CBRE-EA. "Though employment growth has not been a primary factor in the office demand rebound to date, we expect hiring to return as the economy continues to improve in 2011."
According to the CBRE-EA analysis, occupancy in the office market has stabilized, as the vacancy rate began to fall in the second half of 2010. However, tenants are using pricing power to trade up their space while significant slack remains.
Progress to date in office leasing velocity and pricing continues to be inconsistent both regionally and across properties of differing quality. Demand increases to date have largely been driven by leasing of "Class A" space as tenants are using their pricing power to acquire higher quality accommodations. Cities on the East Coast in particular, Washington, DC, New York and Boston continue to perform well, while many markets in the West Coast and in the Southern U.S. lag behind. The CBRE-EA analysis also projects rent stabilization in 2011, as the rent correction eased in 2010 with effective rents declining by a modest 4.5% on a national basis
To speak with Mr. Jones or another CBRE-EA expert, please contact Robert McGrath (212.984.8267 or Robert.McGrath@cbre.com
).About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2010 revenue). The Company has approximately 31,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our Web site at www.cbre.com