New Deliveries Fall but Construction Still Growing and Will Challenge Occupancy Rates in 2019

The Q3 2018 U.S. Top Office Metros Snapshot reports that all but one of the top 10 U.S. office markets posted positive absorption in Q3 2018 — though absorption declined in the five markets relative to Q2 2018. Construction fell markedly this quarter versus last, with less product coming to market in seven of the 10 metros. Still, construction continues to be a concern in some markets as building area under construction continues to rise and new supply is undercutting occupancy gains, even where leasing activity is quite strong. Rents rose at least 1% compared with Q2 2018 in six of the 10 metros, led by 2.4% in New York, but fell significantly in the San Francisco Bay Area. With coworking accounting for a large and growing share of leasing in key markets, traditional property metrics like vacancy rates are becoming less reliable and less meaningful.

Key takeaways from this report include:

For more details on the latest office trends in these top metro markets, download the Q3 2018 U.S. Top Office Metros Snapshot and look for our full Q3 2018 U.S. Office Report coming soon.