Reis Inc Reveals Office Vacancy Rates in United States Rose in Third Quarter
Office occupancy and its continued rise is a clear indicator of the employment situation in a country, while the rise in vacancy rates is a cause for alarm. According to the latest report from the real estate research outfit Reis, the office vacancy rate in the United States has actually climbed marginally in the third quarter so far. In the study compiled by Reis, as many as 79 metropolitan areas in the United States were covered. Out of those 79 areas, vacancy rates have gone up in 29.
In the report, the company stated,
Office occupancy growth has been sluggish throughout this expansion as firms have leased far fewer square feet per added job than in previous cycles.
On the other hand, the research firm also revealed that office space construction has also declined in the third quarter. In the third quarter of 2018, the cumulative office space construction in the same metropolitan areas had been 9.4 million square feet. However, in the same quarter in 2019, it has declined substantially and is currently at 4.4 million square feet.
There were other important findings in the report as well and one of the most notable ones was related to net absorption. The term denotes the quantum of office space that is sold during a certain period of time. In the third quarter, it fell to 4.5 million square feet and it reflects a drop of as much as 4.5%. However, amongst all these alarming findings, Reis stated that effective rents and asking rents both experience a rise of 2.6% from the same quarter in 2018. The research firm indicated that growth in the office space market is expected to remain positive. The report stated,
The news on the office market has not generated headlines, but growth remains positive and should remain positive this year and next.