- Posted at 9:46, July 18, 2014
- By Russ Bleemer
Chicago-based real estate investment and management giant Jones Lang Lasalle released its 2013 National Office Market Report yesterday, finding that U.S. national office market has absorbed 13 million square feet of space during 2013's final quarter 2013.
That's the highest level recorded since 2007, and a 24.5% increase over the highest quarterly net absorption levels--that is, the change in the amount of space occupied in a market--over the past six years, according to the firm's press release.
The firm projects a seller's market, "in the landlords' favor until additional supply hits in mid-2015 into 2016."
The New York area is the largest office market by available space in the nation in a JLL report ranking metropolitan areas:
New York 444,228,244 square feet
Washington, DC 330,057,384 square feet
Chicago 235,143,001 square feet
Los Angeles 189,206,334 square feet
Dallas 160,253,612 square feet
Those five markets constitute nearly 39% of the available office space in the nation.
Locally, Jones Lang Lasalle projects that "should New York and Washington exhibit continued stability[,] fundamentals could exceed forecasts over the next couple of years." The two markets, the report says, "accounted for more than five million square feet of net absorption–well over a third of national absorption gains" in 2013's fourth quarter.
In NYC, JLL ranks the following submarkets, which the firm says make up 20.7% of the overall central business district office space:
Plaza District 100,107,877
Grand Central 69,995,676
Penn Plaza 43,553,463
Financial District 42,892,883
World Trade Center 42,702,460
Portland, New York, San Francisco had the lowest percentage office vacancy rates, at
The highest asking rents in the nation, not surprisingly, are in New York at $61.81 per square foot. The report says that 76% of the national office market showed higher rents--an average of 0.4% in 2013's final quarter, and ended the year about 3.5% higher.
Overall, the JLL report says that about 40 million square feet of positive net absorption was recorded in 2013, up significantly from 28.2 million square feet in 2012.
The fourth quarter was the 15th consecutive quarter with positive net absorption. Of the 44 major downtown and 55 suburban markets the company surveyed, 80% "recorded positive absorption levels between October and December," according to JLL.
This all adds up to a seller's market. "As market dynamics shift toward a more stable office environment," JLL says, "landlord confidence continues to grow and for the 12th consecutive quarter, has fueled increased asking rents and decreased concessions across a broad range of markets. In fact, when looking at leverage for tenants in the market ahead, less than 10 percent of geographies JLL tracks will be tenant-favorable in 2015."