Developers delivered 11.1 million sq. ft. of new space in Q4, bringing the annual total to 46.3 million sq. ft. — the largest amount since 2009.
Suburban markets accounted for approximately three-quarters of the new construction in both Q4 and full-year 2017, compared with their two-thirds share of existing inventory.
Net absorption totaled 6.9 million sq. ft. in Q4 and 36.4 million sq. ft. for the year, marking the eighth consecutive year of positive absorption but down from the 53.6 million-sq.-ft. annual average from 2014 to 2016. Overall demand remained healthy due to continued office-using job growth and high business confidence.
The overall vacancy rate increased by 10 basis points (bps) on both a quarter-over-quarter and year-over-year basis to 13.0%, remaining near the cyclical low. The downtown and suburban vacancy rates increased by 10 bps quarter-over-quarter and year-over-year as well, to 10.7% and 14.2%, respectively, largely due to increases in new supply.
Rent growth slowed to +1.7% year-over-year in Q4, largely due to flat rents in the downtown market.