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​​​​​​​​​United States Office Outlook | Q4 2017

The U.S. office market continued to show strength through the fourth quarter of 2017, registering the strongest quarterly occupancy growth since late 2015, with 13.2 million s.f. of positive net absorption. The tech industry continues to fuel leasing activity, leading all sectors for the third consecutive year.

But a growing talent shortage is expected to present challenges to the industry in the future. This is already being felt in tech hubs like the San Francisco Bay Area, where employment growth has been cut in half over recent months.

Despite the strong demand, occupancy gains aren’t matching the rapid pace of development. We expect vacancy to continue its steady rise in 2018 and into 2019 as available blocks of space are likely to increase faster than the market can absorb. 

Here are three things to keep an eye on in the coming months:

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Click through the tabs below to compare market performance across key categories.

Rental rates ($)

Class A rent growth slowed by 120 basis points, but remained firmly positive. Rates will stabilize as lower-priced, second-generation and sublease space become more prominent.

Market Rental rates ($)
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YTD net absorption (s.f.)

Quarterly net absorption hit 12.3 m.s.f., reversing a recent slowdown. Dallas and Seattle-Bellevue have claimed more than a third of all U.S. growth so far this year.

Market YTD net absorption (s.f.)
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Vacancy (%)

Vacancy rose for the fourth consecutive quarter to 15%. We expect total vacancy to inch higher as 75.4 m.s.f of office product delivers through 2018.

Market Vacancy (%)
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Under construction (s.f.)

Groundbreakings remained muted in Q3 and we expect development activity to continue at a moderate pace, balancing supply and demand.

Market Under construction (s.f.)
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United States office property clock

JLL Office Outlook clock (image)

Source: JLL



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