Owners gaining negotiating leverage in most major downtown markets
Angeles, March 30, 2015 – Owners of
office space are continuing to gain leverage as steady economic growth has
pushed office occupancy to all-time highs across the U.S., according to a new
report from CBRE Research. The report finds that annual tenant demand, as
measured by net absorption, totaled 52.7 million square feet in 2014 – the
highest annual amount since 2007. This demand has pushed the number of U.S. downtown
and suburban markets on CBRE’s quarterly “Occupiers vs. Owners Market Meter” to
19 owner-favorable markets, compared to just eight occupier-favorable markets.
markets across the country saw the strongest annual total since 2006 with 21.1
million square feet of positive net absorption. Manhattan (7.3 million sq.
ft.), Houston (5.5 million sq. ft.) and San Jose (3.9 million sq. ft.)
represented the top markets for net absorption, followed by Dallas/Ft. Worth,
Atlanta and Orange County, with 2.5 million sq. ft. each.
to be fueled primarily by the high-tech sector, which accounted for 19 percent
of 2014’s largest lease transactions by square footage across the country. This
represents a significant jump over the year prior, where high tech accounted
for 13.6 percent of the largest lease transactions. Financial services, business
services, healthcare/life sciences and creative services rounded out the top
five sectors for leasing activity in major markets in 2014.
term outlook is for high tech, financial services and government to be the most
active industries leasing office space,” said Colin Yasukochi, Director of
Research and Analysis for CBRE. “As supply is slow to respond to this growing
demand, tenants can expect to see rising occupancy costs, which will compel
many to consider ways to achieve more efficient footprints through workplace
strategy, or to explore lower cost sub-markets.”
to the CBRE report, U.S. economic growth is expected to further boost office
space demand over the next three years, leading to tight market conditions and
higher rents – 10 of the 14 major downtown markets and eight of the 13 major
suburban markets surveyed by CBRE Research are expecting rents to rise in
2015. Vacancy should continue its
downward trend in the near term, bottoming out at 12.2 percent in 2018.
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 (in
terms of 2014 revenue). The Company has
more than 52,000 employees (excluding affiliates), and serves real estate
owners, investors and occupiers through more than 370 offices (excluding
affiliates) worldwide. CBRE 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 website at