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Class A office vacancy edges downward slightly in Q1 on flat rent growth

• Without any new deliveries at the start of the year, Class A vacancy declined slightly after rising for 5 straight quarters. As vacancy has steadily climbed, the rate of growth in asking rates has correspondingly slowed after peaking in early 2017. For Q1 2018, Class A asking rental rates were nearly unchanged from a year ago.

• Leasing activity at the end of 2017 will help push vacancy rates for Class A space lower in the coming quarters. The largest pending move into currently vacant space will come from Stanley, Black & Decker occupying nearly 77,000 s.f. of new construction.

• The current development pipeline, however, is only 54.6% preleased, and deliveries set for later in 2018 will continue to push vacancy rates higher by year end. As a result, further rental growth for Class A product will likely be hampered by rising vacancy trends.

Source: JLL Research

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