U.S. office market statistics, trends, & outlook

As leasing activity and occupancy growth speed past expectations, the office market is heading into 2019 in highly positive territory

After three quarters of positive but slowing activity, the fourth quarter ended the year on a highly optimistic note, characterized by an active leasing market and sustained absorption and rent growth rather than a third year of slower net absorption and an acceleration in vacancy increases as expected earlier in 2018. While new supply is still driving a gradual shift in dynamics, the extended run of buoyant macroeconomic performance and continued expansion from tenants will make this transition particularly incremental and balanced.

Entering 2019, the trends expected to take place during Q4 are likely to begin in earnest. Large-scale relocations in gateway markets from a greater number of rightsizing and consolidating users are going to catalyze further flight to quality, place further pressure on Class B as well as non-Trophy Class A vacancy and push concessions beyond their already high levels. The compression of effective rents already underway in primary geographies will also spread to secondary markets, opening up additional options and leverage for tenants.

As 2019 begins, here are four things to watch:

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

Rental rates ($)

Rents rose by 0.7%, an improvement over the second quarter but still slower than earlier in the recovery as tenant demand remains stable and second-generation blocks hit the market.

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

Absorption continues to be positive, but the 18 m.s.f. of growth seen so far this year is still below previous years and will be the lowest level since 2010 at year-end.

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

Vacancy has risen by 40 basis points over the course of 2018 and will see further increases as new supply delivers.

Market Total vacancy (%)
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Under construction (s.f.)

Construction volumes have shown little change in recent quarters, but will pull back as starts remain below 2015-2017 levels given oversupply concerns.

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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United States office insight - Q4 2018

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