In this article we examine the current context of the U.S. office market and highlight the key performance indicators in Q1 2019.

Though the U.S. office market had a quiet start to 2019, occupancy and rents held firm at cycle highs, as net absorption and sales volume were down, as is common for first quarters.  Demand remains largely dominated by tech and coworking firms. Firms continue to focus on leasing the best space in order to attract and retain talent. Class A space accounted for almost all first-quarter absorption. Construction activity has surpassed the prior cycle’s peak and reached a record high. Any supply concerns remain localized and submarket specific. Sales volume is down, as is typical for a first quarter, but capitalization rates (cap rates) and pricing are holding firm. Suburban markets continue to see the greatest share of capital being placed.

Vacancy Remains at a Record Low 

CBD Markets are Still Seeing Rent Growth

Absorption Drops Sharply

Construction is Still Rising

Cap rates and pricing remain strong

For more insights, check out our Q1 2019 Top Office Markets Report and stay tuned for our Q1 2019 Office Market Outlook Report to be published soon.

About the author:

Stephen is the National Director of Office Research for Colliers International, where he focuses on analyzing office property trends, compiling Colliers’ thought leadership and delivering timely market projections to provide clients with a leading edge in our industry.