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Relocations to new space in CBDs are pushing up sublease vacancy; direct vacancy remains stable

​​​The delivery of Class A space in CBDs rose sharply to 15.6 million square feet in 2016 at the same time as net absorption and expansionary activity began to show signs of slowing. With traditional tenants most exposed to rightsizing anchoring new developments and relocating to new space. Combined with lower demand for space in vacated commodity properties, sublease vacancy rose by 30 basis points in 2016, while direct vacancy stayed flat at 10.9 percent.

47.1 million square feet of space is expected to come to the market in CBDs in 2017 and 2018, which will place further upward pressure on vacancy, although preleasing remains robust. Oversupply concerns in New York and Washington, DC, among other markets, may have a disproportionate impact on national CBD Class A vacancy.

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