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Office Market Continues Steady, Albeit Sluggish Pace
Continuing its steady but sluggish pace, the office market recorded no change in vacancy rate in the third quarter, according to a preliminary report from Reis. Currently at 16.1% for the second quarter in a row, the national office vacancy rate has moderated between 16% and 16.1% for the last seven quarters.
Although the office market seems to be stalling in this expansion with a persistently high vacancy rate relative to previous expansions, Reis’ senior economist Barbara Byrne Denham notes, “one could argue that the market is in equilibrium, as occupancy growth moves in line with inventory growth.”
Construction fell to 6.5 million square feet from 10.4 million last quarter and 8.1 million in the third quarter of 2016. Net absorption was in line with construction at 5.4 million. Last quarter’s net absorption was 4.8 million square feet, and third quarter 2016 net absorption was 3.7 million square feet.
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