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Office Insight

United States

Report | United States Office Insight - Q4 2010

Summary

While some markets have begun to recover with steady occupancy and rent growth, most remain a couple of quarters from reaching the bottom.  Still, the uncertainty and angst that marked 2010 will improve to cautious confidence in 2011.

Demand levels are steadily increasing throughout market segments.  Almost two-thirds of major markets experienced an uptick in tour velocity during the fourth quarter.  The four industry groups posting the largest occupancy gains and their affected markets are federal government, for-profit education, energy and technology.

Absorption is slightly up and vacancy is down, a trend which should continue into 2011.  While it has gained for three consecutive quarters, it is still relatively weak overall.  Nationwide vacancy levels closed 2010 at an average 18.6%, almost identical to 2009.  Net effective rents are increasing as rent abatement and tenant improvement allowances have fallen.  Asking rents are essentially stable at an average $27.20/s.f. 

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