A Mixed Start to 2019 but Office Market Fundamentals Remain Sound

by | 13 May 2019

Our latest research report — The Top Office Markets Snapshot — presents the key trends and statistics for each of the top 10 office markets in the U.S.

Key Takeaways

  • The first quarter of the year is usually the most subdued and Q1 2019 proved no exception. Absorption slowed for the most part across the major office markets in the U.S., but this is no cause for concern.
  • Fundamentally, we remain on solid ground. Any shifts being seen, such as a rise in sublease space in some markets, are both anticipated at this stage in the cycle and do not impact fundamentals materially.
  • Seven of our top 10 U.S. office markets posted positive net absorption in Q1 2019, with levels rising from the prior quarter in three of the markets, but leasing remains highly concentrated in just two sectors: coworking and tech.
  • At the same time, vacancy rates rose in five markets as new supply outpaced absorption. These increases were mostly modest and, in some instances, up from unsustainably tight levels.
  • Average asking rates increased in eight markets and held firm in the remaining two. New highs continue to be set in Boston and Manhattan.
  • Coworking and flexible workspace operators are still expanding at a rapid clip, leasing over one million square feet in Manhattan alone. Major leases were signed in Atlanta, Boston, Los Angeles and Washington, D.C., mostly by WeWork.
  • Any supply-side concerns are limited and highly localized with the principal pressure points in Los Angeles and Washington, D.C.

For more details on the latest office trends in these top metro markets, download the Q1 2019 U.S. Top Office Metros Snapshot and look for our full Q1 2019 U.S. Office Report coming soon.