U.S. office properties saw asking rents rise 0.4% in May 2019 over the previous three-month period, according to a national report from Yardi Matrix.
The report noted the current pipeline for new construction, which counts around 173 million square feet of office space, is mostly concentrated in metros that have growing space needs or a strong demand for new product with updated technology and amenities. Cities with the most space under construction by percentage of existing stock include Brooklyn, Nashville and Austin. Manhattan currently has 20.8 million square feet in the pipeline, according to Yardi, which is more than double any other metro.
Elsewhere, the June 2019 Office Investor Sentiment Report from Real Capital Markets (RCM) stated that the office investment market has shown signs of being back on track, after a slowdown at the end of 2018 that lingered into 2019.
“While some of the primary issues remain, and experts maintain that we are reaching the top of the cycle, many concerns have burned off,” the RCM report said. “Further, there remains significant capital in the market earmarked for commercial real estate. Buyers and sellers have hit the reset button and are expected to deliver a consistent and palatable baseline of activity in the remainder of 2019 and into 2020.
RCM noted several trends to watch for in the office investment market including the continued expansion of co-working; the resurgence of suburban office investment; a shortage of quality assets and a general inactivity from investors sitting on the sidelines, which has left room for deals.
Further, a survey from RCM of U.S. office property owners, investors, and brokers expressed confidence in the health of the market, due to factors that include the overall strength of the economy, the presence of job growth and population expansion in most markets. Almost 40% of respondents expect investment activity levels to be consistent over the next year, compared to only 12% that expect activity levels to decrease.
David Cohen is Southeast Editorial Director at Connect Commercial Real Estate. David is a media veteran with more than 10 years of experience in journalism, copywriting and communications across a variety of roles. He is responsible for covering commercial real estate news and trends in the Southeast, Florida, Washington D.C. and Boston at Connect CRE as well as specializing in the Student Housing sector.
Prior to joining Connect, David was the editor of Northeast Real Estate Business magazine and Student Housing Business magazine at France Media as well as spending time freelancing for ESPN and the Associated Press in the fast-paced field of live sports event production. He is also an owner and investor in multifamily real estate in Atlanta, GA.
David currently resides in Atlanta and graduated from the College of Communication & Information at the University of Tennessee Knoxville.