Occupancy, Absorption Levels Hold Serve as Market Indicators Find Recovery Continuing at Slow but Steady Pace
The overall U.S. office vacancy rate edged down and net absorption rose to 15 million square feet during the quarter from 13 million square feet at mid-year 2012. The relatively little new office supply and continued low levels of new office construction supported the balance in supply and demand.
Meanwhile, office tenants continued to enjoy a ‘holiday’ from rent increases as office rents in most market have yet to budge much from their market trough tipping point, according to analysts for Property and Portfolio Research (PPR), CoStar’s analytics and forecasting division.
“The recovery is only one-third of the way there in the office sector, we still have two-thirds to go,” said Walter Page, PPR director of research, office, who was joined by PPR’s Managing Director Hans Nordby and Manager, U.S. Market Research Aaron Jodka, in dissecting the third-quarter numbers for CoStar clients.
If there was a surprise for the quarter it was on the upside. Page said he had expected demand to fall off a bit in the quarter, based on anecdotal reports of companies postponing hiring and expansion decisions due to economic and political uncertainties created by this fall’s hotly contested presidential election and the unresolved budget impasse.