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Office Report

United States

Report | United States Office Outlook - Q1 2013

Summary

​The U.S. office market is beginning to muscle its way through the challenges of heightened uncertainty, wavering demand and an evolving tenant that paralyzed most aspects of the office sector in the second half of 2011 and all of 2012. 

The first quarter performance of 2013 provided a view of a transitioning market that appears to be on far-sturdier ground than we saw 12 months ago. Tenants came back into the market in a meaningful way with respect to touring spaces and completing deals, sublease space declined dramatically in the first quarter, occupancy growth outnumbered gains from 12 months ago by more than five-fold and we saw growth in geographies and product types that have been dormant for several years.

Additionally, rents, which were declining in close to 40.0 percent of markets at this point last year, are increasing slowly, but consistently, across more than 80.0 percent of markets JLL tracks, while concessions are firmly headed in the downward direction. Even construction, while focused in a handful of markets on the East and West coasts, is jumping up from near-historical lows.
 
We believe 2013 will be characterized by a stronger and faster economic engine, a diversifying recovery across the office sector that will lead to a landlord-favorable environment across most submarkets and product types at this time next year and a tenant paradigm shift that will fundamentally alter how we view and use office space.

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