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Office property clock

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Reading the clock

Asking rents continue to move upward across the United States, rising by 1.6 percent over the quarter to $33.78. The consistent delivery of new supply is creating an artificial boost in asking rents in many gateway cities where construction completions are ramping up, with Class A rent growth positive over the year in New York (+6.8 percent), Chicago’s CBD (+4.0 percent) and San Francisco (+2.5 percent) despite shifting supply-and-demand paradigms as a wave of construction is hitting the market. At the same time, a 3.5-percent quarterly increase in concessions is placing greater pressure on effective rents in both new and second-generation product, leading to a flattening and in some cases decline in net effective rents. On the other hand, smaller and more supply-constrained geographies will continue to see costs rise with little in the way of relief, particularly in mid-size, Sun Belt and Southeastern markets.

Office Property Clock explained (image)