The most dramatic rise by sector occurred in CBD office. The sector's third quarter results equate to an annual increase of 6.7%, well above the 2.7% annual growth rate it posted in the third quarter of 2005. The class A apartment market also saw rents rise at a 6.7% annual clip during the third quarter, and all sectors saw rents during the quarter grow at least a 5.2% annual clip.
On the down side, the national results belie "a fairly marked disparity in performance across regions," GRA's managing director of global forecasting and research Dan O'Connor tells GlobeSt.com. "Looking back 12 months in the good regions, rental rate growth has been between 7% and 9%. In the weak regions, it has been more on the order of 2% to 4%, effectively half."
The top third-quarter performers on a regional basis were the Pacific regions and the Florida/Gulf regions, each of which saw average rents across all sectors grow at an annual clip greater than 8%. The slowest third quarter growth occurred in the two heartland regions, each of which saw overall average rents grow at annual clip below 3%.
On a market-by-market basis, San Francisco may have posted the highest performance average. It placed among the top three in rent growth in the two office sectors (CBD office and suburban office) and the two apartment sectors (class A and class B), and also placed in the top 10 for the two remaining sectors, retail and warehouse. Orange County placed in the top five in three sectors--CBD office, suburban office and class A apartments.
While no one market led more than one sector, the same can't be said for the other side of the coin. Detroit placed dead last in the office, retail and warehouse categories and second to last in the two apartment categories. Detroit was the only city in the report to post negative rent growth in the office and retail categories.
In the CBD office sector, rents grew fastest in New York, where third quarter results equated to an annual growth rate above 14%. The suburban office sector, the best performing market in the third quarter was West Palm Beach, which posted the equivalent of 11% annual rent growth.
In the warehouse sector, the best performer was by far Las Vegas, where quarterly results suggest an annualized rental growth rate of nearly 18%. In retail, the best third quarter performer was Honolulu, which posted the equivalent of nearly 13% annual rent growth.
In the apartment sectors, Seattle took class A honors with plus-12% annualized rent growth during the quarter. Class B honors went to San Jose, which posted the equivalent of nearly 11% rent growth during the quarter.
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