Absorption rates show the net change in occupation levels in the central business districts of major US cities and for the first time in three years, the trends were positive, to the extent of 2.2 million sq ft.
Commercial property firm Cushman and Wakefield attributes its positive absorption figures to a combination of increased office space leasing activity and a relative lack of newly constructed buildings having reached completion during the past 12 months.
Roughly 7.5 million sq ft of office space was reportedly made available in America’s various CBDs over the course of last year, while new leasing deals were agreed on around 62.4 million sq ft in these same areas.
Analysts at C&W do not expect to see many new office buildings completed in major US cities in 2011 but overall vacancy levels are predicted to keep falling as leasing activity continues to pick up.
“Positive absorption is a promising sign for the US office market’s recovery,” commented Maria Sicola, executive managing director and head of Americas research for C&W.
“Looking forward to this year, restricted new development will play a major role in sustaining our recovery,” she went on to suggest.
A total of 31 CBDs are monitored and assessed as part of C&W’s overall US office market analysis, with the company reporting only slight changes in the average price of office space across America during 2010.
Earlier this month, the same firm revealed figures showing that Manhattan’s most recent quarter was its strongest for several years in terms of new office space leasing activity.
Editor’s notes: At the end of 2022, the U.S. national office vacancy rate was 16.5% which reflected a 0.9% increase year on year.
This meant that approximately 83.5% of office space was leased or pre-leased. It should be noted that the actual occupation of leased offices was significantly lower than this as mass layoffs continued, and those that remained in employment were slow in their return to the office.
A total of 135 million square feet of office space was under construction at the end of 2022, with another 261 million square feet in the planning stages.
It is expected that higher interest rates will curb the speed of some of these projects breaking ground.
At the end of 2022, the average U.S. office listing rental rate was $38.19 per square foot per year, down 0.7% compared to the previous year.
The most expensive office space was in New York City in Midtown Manhattan where net effective rents were at $220 per square foot.
Flexible workspace options such as private offices, managed executive suites and coworking desks continued to grow in popularity.
You can view profiles of flexi office providers in Manhattan here.