32M SF Of Positive Office Absorption Expected Nationwide In 2018
Though growth in U.S. office markets will be slow and steady in 2018, fundamentals are expected to be healthy with net absorption reaching a total of 32.1M SF.
Downtown markets, including Manhattan, San Francisco and Washington, D.C., will receive the most supply in the coming year, which will lead to a modest increase in vacancy rates, CBRE reports.
Similar to 2017, completions will also outpace net absorption nationwide. Overall rent growth is anticipated to decline from 2.4% in 2017 to 2% in 2018.
When it comes to occupiers, the tight labor market continues to be a challenge as does technology-driven competition. To compete, those in the financial, tech and even legal sectors are lowering space requirements and instead moving into prime office space with a focus on workplace design.
“Occupiers are taking a balanced approach to real estate strategy, continuing to pursue space efficiency while reinvesting savings into workplace enhancements that will help them attract and retain employees,” CBRE Global President of Advisory & Transaction Services/Occupier Whitley Collins said in a statement.
As cloud technology and mobile work increases, flexible-serviced agreements like those offered by co-working company WeWork are also becoming a more popular option.
“We expect occupiers’ interest in shorter-term leases and third-party space aggregation to grow as these models are more widely tested and understood,” CBRE America’s Head of Occupier Research Julie Whelan said.
