Naturally, some local markets are faring considerably better than others, and Ten-X sees five on the West Coast and in Florida as the best investment bets at present. The firm cites Portland, OR; Oakland, CA; Palm Beach, FL; Orange County, CA; and Miami as benefiting from growing economies and consistent job growth.

At the other end of the spectrum are five geographically diverse markets in which Ten-X recommends that investors with office holdings consider selling them. Houston, Cleveland, suburban Maryland, Memphis and Milwaukee all suffer from weakening labor markets, which have reduced demand for office space and slowed absorption significantly.

IRVINE, CA—Office fundamentals appear to be in a holding pattern after years of gradual recovery, Ten-X said Wednesday. Vacancy rates nationally have been essentially unchanged for three consecutive quarters, and rent growth has been sluggish recently.

“After a long, gradual recovery following the last recession, the office sector has seen its progress slow significantly over the last year,” says Peter Muoio, chief economist with Ten-X. “While it faces long-term challenges as technology increases the viability of non-traditional working arrangements, the resilient economy makes it likely that the current malaise is only temporary. Overall demand should increase as employers continue to add jobs over the next two years, which bodes well for investors' long-term prospects in most areas of the country.”

Despite long-term headwinds in the form of the rise of shared offices, cloud computing and remote teleconferencing, the office sector is projected to see moderate improvement as the current economic expansion advances. Ten-X says cyclical factors are expected to bring vacancies to a low of 15.3% next year before they regress to roughly 17.6% during a downturn scenario over the subsequent two years.

Rent growth, as well, is expected to accelerate to annual gains of about 3% in 2017 and 2018. In 2016, the sector managed 2.8% year-over-year growth in effective rents, the slowest annual pace since mid-2014.

Naturally, some local markets are faring considerably better than others, and Ten-X sees five on the West Coast and in Florida as the best investment bets at present. The firm cites Portland, OR; Oakland, CA; Palm Beach, FL; Orange County, CA; and Miami as benefiting from growing economies and consistent job growth.

At the other end of the spectrum are five geographically diverse markets in which Ten-X recommends that investors with office holdings consider selling them. Houston, Cleveland, suburban Maryland, Memphis and Milwaukee all suffer from weakening labor markets, which have reduced demand for office space and slowed absorption significantly.