The demand for US office space continues to show strength, tightening vacancy rates and boosting average rents.
A new report from Yardi Matrix shows that average asking rents were up 1.7% in the six months ending June 2019 and the national vacancy rate was down 20 percentage points month-over-month in June to 13.5%.
The highest increases in asking rents were in San Francisco (18.8%), Brooklyn (11.2%), and the Bay Area (10.0%). San Francisco and Brooklyn also had some of tightest vacancy rates at 8.0% and 6.7% respectively while the Bay Area’s vacancy rate was above average at 14.3%.
Employment stats show that office-using employment was up 1.7% year-over-year, beating the 1.5% growth for all employment.
The pipeline of supply shows no sign of slowing down with 26.5 million square feet of office space delivered year-to-date. There is also 174.7 million square feet currently under construction, half of it in six top gateway markets—Manhattan, N.Y., San Francisco, Washington, D.C., Boston, Los Angeles and Chicago—and growing tech markets Seattle, the Bay Area and Austin, Texas.
The report says that office sales totaled $38.8 billion through June and "the decline of the 10-year Treasury yield should continue to act as a catalyst for transactions.”
More market update: