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CBRE Foresees Continued Office Market Expansion in 2018
CBRE’s 2018 U.S. Real Estate Market Outlook found that improved U.S. office market fundamentals should continue, downtown markets will receive a disproportionate amount of new supply, the tech sector will likely remain a primary demand driver, and occupiers will pursue commercial real estate space efficiency and agility in 2018.
CBRE’s Scott Marshall says, “The strongest gains in employment, occupancy and rents will likely occur where recovery has lagged during this cycle, and where there is little or no construction underway, including many former housing-bubble markets in the South and West.”
CBRE expects continued U.S. office market growth in 2018, with net absorption projected to total 32.1 million square feet. As occupiers have focused on maximizing efficiency and productivity in their portfolios, net absorption has become more muted in recent years than in past expansion periods. That has led to more moderate but sustainable growth rates, which should continue in 2018.
– As a result of new supply in 2018, the downtown vacancy rate will increase more (60 basis points) than the suburban vacancy rate (10 basis points)
– The tech sector accounted for nearly 20% of major office leasing activity in recent years, and will likely remain a primary demand driver in 2018 in tech markets
– Labor remains the primary challenge facing occupiers, due in varying degrees to cyclical low unemployment, technology-driven competition and a widening skills gap
For comments, questions or concerns, please contact Dennis Kaiser
