Q3 Adds to Year-to-Date Gain in Office Demand
- Q3 2019 was the 30th consecutive quarter of positive net absorption for the U.S. office market.
- The 14.3 million sq. ft. of net absorption in Q3 was lower than in Q2 and one year ago, but the year-to-date total is 1.1 million sq. ft. more than the same period in 2018.
- The overall office vacancy rate declined by 10 basis points in Q3 to 12.1%, down 50 basis points (bps) from a year ago.
- The suburban office vacancy rate declined for a sixth consecutive quarter to 13.1% in Q3, the lowest level since 2001.
- The average gross asking rent increased by 4.6% year-over-year to $34.53 per sq. ft. in Q3, the fastest pace since early 2017. Downtown office rents continued to rise faster than suburban rents year-over-year (8.0% vs. 2.2%).
- Completions were slightly down to 8.4 million sq. ft. in Q3, 83.2% of them in suburban areas.
- Demand has shifted in intensity to Southern markets so far this year. Four of the top 10 highest net absorption rates among major markets are in the South.