WASHINGTON, DC–The Washington DC region is at peak employment but Suburban Maryland's office market is mired in a prolonged slump. Professional/business employment declined by one percent over the past year, while information jobs dropped by 1.4%. New supply is finding only tepid demand, pushing vacancies up 20 basis points to 16.5%. Market NOI is projected to grow a modest 2.5% through 2018.
The bottom line, according to research from the online real estate marketplace Ten-X: it may be time to exit your office holdings here.
The company identified five markets in its latest U.S. Office Market Outlook, where office investors should consider selling their properties because of lackluster fundamentals. These cities are being undermined by weakening labor markets, which have reduced demand for office space and significantly slowed absorption rates, according to Ten-X.
Besides Suburban Maryland, Ten-X also urged office investors to consider selling in Houston, Cleveland, Memphis and Milwaukee.
Portland, Ore., Oakland, Palm Beach, Fla., Orange County, Calif. and Miami are five markets in which investors should consider buying office assets, Ten-X also said. By contrast, these regions enjoy growing economies, strong demographics and consistent job growth.
The following chart shows why Ten-X came to its conclusions.
WASHINGTON, DC–The Washington DC region is at peak employment but Suburban Maryland's office market is mired in a prolonged slump. Professional/business employment declined by one percent over the past year, while information jobs dropped by 1.4%. New supply is finding only tepid demand, pushing vacancies up 20 basis points to 16.5%. Market NOI is projected to grow a modest 2.5% through 2018.
The bottom line, according to research from the online real estate marketplace Ten-X: it may be time to exit your office holdings here.
The company identified five markets in its latest U.S. Office Market Outlook, where office investors should consider selling their properties because of lackluster fundamentals. These cities are being undermined by weakening labor markets, which have reduced demand for office space and significantly slowed absorption rates, according to Ten-X.
Besides Suburban Maryland, Ten-X also urged office investors to consider selling in Houston, Cleveland, Memphis and Milwaukee.
Portland, Ore., Oakland, Palm Beach, Fla., Orange County, Calif. and Miami are five markets in which investors should consider buying office assets, Ten-X also said. By contrast, these regions enjoy growing economies, strong demographics and consistent job growth.
The following chart shows why Ten-X came to its conclusions.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
