Los Angeles, January 10, 2017 – Vacant space in the U.S. office market declined by 10 basis points (bps) during the fourth quarter of 2016 (Q4 2016), to 12.9 percent, according to the latest analysis from CBRE Group, Inc.
Suburban markets continued to outperform downtowns, with office vacancy in the suburbs dropping 20 bps to 14.1% in Q4 2016. Downtown vacancy remained unchanged at 10.7%. The national office vacancy rate remains at its lowest level since 2008, and has declined 20 bps over the past twelve months.
Vacancy continued to fall in a majority of U.S. markets, with vacancy declining in 37 of 63 office markets.
”The office market continued its slow, steady march of declining vacancy in the fourth quarter but a tight labor market may limit net absorption going forward,“ said Jeffrey Havsy, Americas’ chief economist for CBRE. “As new supply ramps up, the vacancy rate could trend upward.”
“Some of the largest office vacancy declines were in Midwest markets that were late to the recovery,” noted Mr. Havsy. “While the vacancy rates in many of those markets remain elevated they are moving in a positive direction.”
Mid-size Midwest markets showed the largest quarterly declines including Cleveland (120 bps), Louisville (120 bps) and Milwaukee (120 bps). In addition, Cincinnati, Raleigh, Ventura (CA) and Detroit, each declined by 80 bps or more. In the past year, the vacancy tightening was found predominantly in mid-sized markets across the nation.
The nation’s lowest vacancy rates at year-end were in Nashville (5.5%), San Francisco (6.4%), Raleigh (7.2%), Austin (7.8%), Seattle (8.2%), Oakland (8.8%), San Jose (9.0%) and Pittsburgh (9.6%).
About CBRE Group, Inc.
CBRE 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 and investment firm (based on 2015 revenue). The company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.