Walter G. Page
Continued Recovery
By Walter G. Page Reflecting a ramping up of office job growth, net absorption of office space increased by 50 percent in the year through the third quarter of 2013, to an annualized 76 million square feet. Because office demand is only growing at a 1 percent rate while office job growth is plus 2 percent, our view is that the office market continues to have upside, with third quarter 2014 demand forecasted at just over 100 million square feet. Since net office deliveries are running at less than half of demand (net absorption) growth, office vacancy rates have declined…
Built Environment
By Walter G. Page Reflecting an improving economic picture, construction activity in the U.S. property markets is increasing, although in most cases it is less than half that of the long-term average. Industrial construction has shown greater activity than office and retail, with industrial in-process construction increasing by 63 percent since 2010, to more than 91 million square feet. That compares to a 32 percent increase for office, to 84 million square feet, and flat construction activity for retail, at 51 million square feet. As a percentage of stock, industrial construction underway today measures about 40 basis points, which is…
Continued Recovery
By Walter Page Fueled by an expected three-year tripling in net absorption and minimal construction activity, office vacancy rates are expected to exhibit a continued solid recovery in the first quarter of 2013. Specifically, office vacancy rates have declined from 12.8 percent in first quarter 2010 to 12.2 percent as of first quarter 2012 and are expected to decline by a robust 60 basis points to 11.6 percent by first quarter 2013. This decline in vacancy is significant because we are now nearing the critical point at which office rents typically show significant growth, compared to declines in recent years….