United States office outlook  - Q1 2019

An above-expectations end to 2018 boosted Q1 2019 performance, as office market dynamics firm before further supply delivers.

April 13, 2019

Countering increasingly cautious economic sentiment both domestically and globally, the U.S. office market continued its growth streak during the first three months of 2019. Still broadly in expansionary mode, tenants drove roughly 14 million square feet of net absorption, and with the delivery supply wave paused until later in 2019 and further into 2020, the vacancy rate declined slightly to 14.7 percent. Similarly, asking rents remain on a slower-but-still upward trajectory and rose by a steady 0.8 percent over the quarter and 2.4 percent annually, in line with recent quarters.

With 110.4 million square feet of space still under construction, however, the market is still awaiting the critical mass of deliveries to firmly shift conditions into more neutral and even tenant-favorable territory in select geographies. Other themes that have accelerated over the past six to eight quarters, namely flight to quality and divergence in performance by asset class, firmed during Q1 and are expected to continue over the course of 2019.

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

Rental rates ($)

Asking rents rose by 0.8 percent in Q1, entirely a result of gains in Class A assets.

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

The nearly 14 million square feet of net absorption seen in Q1 was the third-highest quarterly level of occupancy growth since the beginning of 2017.

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

Vacancy declined by 20 basis points to 14.7 percent in Q1, with decreases mostly in Class A space.

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

Construction activity remains above the 100-million-square-foot threshold.

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 - Q1 2019

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