SEATTLE—Office-market fundamentals in the nation's 10 major metro areas generally remained solid during the second quarter, Colliers International said Wednesday. At the same time, the firm points to a leveling off of rent growth and to a pair of key factors that suggest upward pressure on vacancy rates: tenant downsizing and new supply.
“In Q2 2017, absorption rose in six of the 10 markets and fell in four,” according to Colliers. “Taking into account new supply, vacancy rose in four markets, fell in three and remained unchanged in three,” about the same ratio seen in Q1.
Those three markets where vacancies were unchanged—the San Francisco Bay Area, Manhattan and Seattle—all have vacancy rates below 10% and in fact are the only ones among the top 10 where this is the case. Two of those markets are running neck and neck on vacancies: San Francisco's 6.1% the lowest among the top 10, with Manhattan not far behind at 6.2%. That's in contrast to vacancy rates north of 15% in Los Angeles and Houston, and vacancies not far below 15% in Atlanta, Chicago and Washington, DC.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
