Office Market Update

S.1% year-over-year street rate increase in August 2019.

A new report from Yardi® Matrix shows that demand for U.S. office space remains strong, with office-using employment sector growth—which, at 1.7% year-over-year, tops overall non-farm employment growth—driving a 0.1% year-over-year street rate increase in August 2019.

“Markets with lower-than-average vacancy rates and solid office-using employment growth continue to have the highest rate of year-over-year growth in listing rates,” the report says, citing San Francisco, Tampa, Fla., Nashville, Tenn., and Austin, Texas, as the leaders. Large, expensive spaces entering the market and pushing overall listing rates upward account for much of their increases.

Strong fundamentals don’t always produce high listing rate growth, however. For example, two new business centers and 106,253 square feet of available floor space in an existing mall are depressing rates in Orlando, Fla. The metro had the largest decrease in listing rates in August (-5.9%). Chicago, which has shaky fundamentals, had the second-largest (-5.2%).

Year-to-date office sales through the end of August totaled $55.2 billion, slightly behind the $60.7 billion registered through the same period last year. Space under construction, 179.1 million square feet, represents 2.9% of stock.

The Yardi Matrix national office report for September 2019 has a wealth of information on occupancy trends, supply, office-using employment and more. Download it now.

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AUTHOR

Joel Nelson, senior marketing writer, joined Yardi in 2007. His byline has appeared in New York Real Estate Journal, Canadian Property Management and Los Angeles Lawyer, among others. He has won multiple awards from major professional organizations including the International Association of Business Communicators and Public Communicators of Los Angeles. Joel earned a bachelor’s degree from Pomona College.

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