by Dan Rafter
One real estate broker I spoke with recently referred to the office sector as a yo-yo: It goes up and down with the economy.
The yo-yo, at least, finally appears to be heading back up.
Marcus & Millichap recently released its summer 2015 national office report, and the news was mostly good. According to the report, employment gains across the United States has boosted office demand. Vacancies are falling and rents are rising.
The bad news? Those vacancies and rents aren’t moving quite as fast as anyone would like.
Marcus & Millichap says that the U.S. office market has seen a slow and steady improvement since the end of the recession. Net absorption totaled more than 70 million square feet from the summer of 2014 to the summer of this year. That has resulted in a decline of 30 basis points in the U.S. vacancy rate, which fell to 15.3 percent as of the end of the second quarter.
Marcus & Millichap predicts future declines in the vacancy rate as tenants seek larger spaces to house the workers they’ve recently hired. There has been little new office construction across the country, too, something that shoud also cause vacancy rates in this sector to continue trending down.
According to the Marcus report, construction crews have only added 55 million square feet of new office space across the country in the last 12 months. That is an increase of just 0.8 percent in office inventory.