Tag Archives: U.S. office space


U.S. Office Space Sales Hit Post-Recession Peak in 2015

new Jason stats graphic - June 2015The year 2015 was a very good year for U.S. office space sales, the best in fact since the Great Recession. With increased demand and restricted levels of construction contributing to tightening space availability in metro areas nationwide, U.S. office space net absorption exceeded 100 million square feet for the first time since the crippling recession and the national office vacancy rate dropped another half-percentage point in the year ended 2015.

Since climbing to 13.2% at the peak of the recession, the U.S. office vacancy rate has been on a downward trend.  In 2015, the vacancy rate dropped to 10.8%, down from 11.3% in 2014, according to the CoStar Group’s recent State of the U.S. Office Market 2015 Review and Forecast.

Vacancies were down in 64% of U.S. office submarkets and 56% of metro office markets in fourth quarter of 2015, according to CoStar, whose analysts predict office vacancy rates to continue dropping, reaching about 10% in 2017.

Driven by an “overwhelmingly strong” market that is anticipated to continue into the next quarter, the investment market soared, with preliminary office asset sales rising almost 18% in 2015 to reach $152 billion, CoStar’s economists said.

The CoStar report said the biggest annual vacancy improvements were in the Atlanta, Miami and Nashville markets, each of which outperformed San Francisco, Seattle and Boston, a clear indication of a momentum shift in office market strength away from the technology and energy metros that fueled the economic recovery and expansion and toward markets that were hit by the recession’s housing bust. The office vacancy rate declines in San Francisco appeared to be slowing in the fourth quarter as new office supply was introduced to the market, the review and forecast said.

As expected, Silicon Valley markets experienced the strongest annual occupancy gains. But with the 2015 shift away from higher occupancy in markets driven by energy or technology, a solid eight of the 13 markets with the highest year-over-year occupancy improvements were outside the energy and technology areas.  Big-tenant markets like Atlanta and Dallas instead are showing occupancy results, CoStar reported.

Although American consumers are benefiting from lower gas prices, some geographical areas and parts of the economy have been negatively impacted by the drop in energy pricing, its effect on the stock markets, and global economic instability, according to the report. The S&P 500 is down about 11% since the May 2015 peak, partly because of weakness in energy-related stocks.  In addition, technology stocks have declined more than 10%.

Tech remains among the most volatile markets, with markets such as San Jose, San Francisco, Boston, Raleigh, Austin and Seattle waiting to see how lower private and public market valuations will affect hiring, the economists reported.

Apple and Samsung Electronics were among the large companies that warned recently of a tech sector slowdown in 2016, blaming global economic volatility and declining demand.

And Yahoo has announced plans to reduce its workforce by another 15%, or 1,700 jobs; rid itself of surplus real estate; close five worldwide offices; and consider “strategic alternatives” to possibly sell or spin off its core search engine and web portal business, CoStar said. In December, Yahoo was already looking to sell a 48-acre tract near Levi Stadium in Santa Clara that originally had been intended for an expansion project.

Despite growing concerns in the energy and technology sectors, the continuing momentum from 2015’s strong performance in the U.S. office space market and the commercial real estate market overall is anticipated to continue solidly into 2016, CoStar predicted.

Annual net absorption of U.S. office space jumped to 101 million square feet in 2015, up from 93 million square feet the year before.  Developers delivered 64 million square feet of U.S. office space, up 41% from 2014.  Although the amount of new space under construction has declined over the past two quarters, it showed a modest 7% increase for year over year, ending 2015 at 126 million square feet at year – close to the historical yearly average since 2000.

Annual rent growth stood at 4.4% at year-end 2015, exceeding 2014’s growth of 3.8%, CoStar said, adding that rents were particularly strong in CBDs such as San Francisco at 19.4% and Raleigh, NC at 13.9%. Even rents in the urban core of Atlanta and Detroit grew by 11.2% and 10.5%, respectively.

For more information about Philly office space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) or Leor Hemo (leor.hemo@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate brokerage firm that specializes in Philadelphia office space.

Wolf Commercial Real Estate is a Philadelphia commercial real estate broker that specializes in Philly office space, providing a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with extensive expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philadelphia office space with the Philadelphia commercial properties that best meets their needs.  As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties, including Philadelphia office space, to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Office to Lead 2016 Commercial Construction

new Jason stats graphic - June 2015Office, shopping center, warehouse and hotel construction is expected to jump 11% in 2016, an increase from the 4% improvement projected for 2015, with office development reclaiming its historical role as the leader in the commercial building recovery, a new report says.

At the same time, multifamily construction dollar volume is anticipated to rise 7% on a 5% increase in built units to 480,000, according to the newly released 2016 Dodge Construction Outlook.  That level of gain would be at a slower pace than 2015’s growth, but it is still a gain as continuing development is extended by low vacancies, rising rents and the demand for apartments from millennials, the report released by Dodge Data & Analytics said.

But the growth in commercial building will again be led by the segment’s historical driver — office development — with an assist in private development and demand from technology and finance firms.

Residential, including single-family homes, and nonresidential U.S. construction starts are forecast to rise by 6% in 2016 to $712 billion on the heels of a 9% increase in 2014 and an estimated 13% jump by the end of this year — the strongest annual gain so far in the current expansion, Dodge Data & Analytics said.

The 2015 hike can be largely traced to the heavy industrial projects at the start of the year, including several massive liquefied natural gas terminals in the Gulf Coast region and new power plants, the company noted.

Continued strength in multifamily construction is behind the strong performance in total residential building, which rose 18% in 2015. Single-family is again registering growth after a no-growth year in 2014.  Total nonresidential building slowed in 2015 after jumping 24% the year before, and is now forecast to be flat to slightly down as a result of a sharp pullback for new manufacturing plant starts and a slight drop-off in momentum by the commercial and institutional building segments, according to Dodge.

Other 2016 forecasts provided by Dodge were:

  • Institutional building will increase 9%, up from a 6% rise in 2015.  Specifically, the educational facilities category is benefiting from the passage of recent school construction bond measures that are spurring increases in K-12 school construction.
  • Manufacturing plant construction spending will drop off by another 1% on the heels of 2015’s 28% plunge caused primarily by the decrease in large petrochemical plant starts.
  • Public works is projected to be in 2015, but the new multiyear federal transportation bill anticipated to pass Congress by the first half of 2016 should spur growth in late 2016 and into 2017.

For more information about Philly office space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) or Leor Hemo (leor.hemo@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philadelphia office space.

Wolf Commercial Real Estate is a Philadelphia commercial real estate brokerage firm that specializes in Philly office space, providing a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with extensive expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philadelphia office space with the Philadelphia commercial properties that best meets their needs.  As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties, including Philadelphia office space, to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Demand for U.S. Office Space Hits Pre-Recession Peak

new Jason stats graphic - June 2015Demand for U.S. office space hit pre-recession peak as Net absorption of U.S. office space hit its second-highest quarterly total since 2006, registering 29 million square feet in the third quarter 2015 as demand for U.S. office space from expanding companies roughly doubled the new office supply brought to the market, according to a new office market report from CoStar.

CoStar’s State of the U.S. Office Market Third Quarter 2015 Review and Forecast also reported that the first three quarters of 2015 saw 68 million square feet of net office absorption, compared to an average of 30 million square feet during the same three quarters of 2005 through 2007, the period considered the peak of the last office boom.  At the same time, the U.S. office vacancy rate’s gradual decline continued, dropping to 11% in third-quarter 2015, down another 20 basis points from midyear and a 60 basis point decrease from the third quarter a year ago, the report said.

Another key finding from the report noted that a full 65% of U.S. office submarkets experienced a drop in office vacancies in third-quarter 2015, and 52% of U.S. submarkets have office vacancies that are lower than they were during the 2006-07 peak, with most metros posting string rent growth.

The report also highlighted one significant difference from previous office market cycles: the average vacancy rate for high-quality 4- and 5-Star U.S. office space constructed since 2008 has remained flat, even though the 42 million square feet of new office supply delivered to the market in the first three quarters of 2015 is nearly 40% above the same period in 2005-2007, CoStar said.

“We’re at a rare point.  Vacancy in new space has flat-lined since about 2013. What’s interesting about that is the supply pipeline has not caused the rate to spike up nationally, unlike other market cycles,” said Walter Page, CoStar Group, Inc. director of U.S. research, office.  “Office tenants clearly want this new space and are willing to pay for it because obviously, they’re leasing it up.”

Demand for 4-and 5-Star U.S. office space increased by 2.5% between third-quarter 2014 and third-quarter 2015.  That rate compares with just 1.4% in the overall national office market and is nearly three times the demand growth rate achieved for 1-, 2- and 3-Star properties.

Analysts noted that even with an uptick in rental rates, total occupancy costs as a percentage of company profits stayed at their all-time low, with companies continuing the trend to place more workers into fewer square feet, thereby allowing companies to lease higher-quality space.

For more information about Philly office space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) or Leor Hemo (leor.hemo@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philadelphia office space.

Wolf Commercial Real Estate is a Philadelphia commercial real estate brokerage firm that specializes in Philly office space, providing a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with extensive expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philadelphia office space with the Philadelphia commercial properties that best meets their needs.  As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties, including Philadelphia office space, to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Demand for U.S. Office Space to Remain Strong for Two Years

magnifying glassFueled by falling vacancy rates and rising rents in an increasing number of submarkets, demand for U.S. office space is expected to remain at post-recession highs through 2016, a new CoStar report says.

Also contributing to the rosy forecast is the U.S. office space market’s strong performance in 2014, when net absorption rose 42% from the previous year and a particularly strong fourth quarter saw net absorption reach more than 30 million square feet, according to a CoStar Portfolio Strategy analyst reporting in CoStar’s State of The U.S. Office Market 2014 Review and Forecast.

Net absorption of U.S. office space jumped from 64 million square feet in 2013 to 91 million square feet in 2014, CoStar said.  The amount of U.S. office space absorbed in 2014 almost doubled the level of new U.S. office space added to the market, the report noted.

Over the next two years, CoStar predicts annual absorption through 2016 to remain close to 2014 levels, hovering in the 90 million square-foot range.  With new development supported by increasing rents and tightening vacancy rates, the level of construction deliveries should increase over the period.

The robust demand for U.S. office space indicates occupiers are slowly moving away from the trend of shrinking square foot-per-employee office footprints, CoStar said.  In addition, the analysis said the shadow supply of empty office space remaining from the Great Recession is thinning as growth continues at a “very strong clip.”

The U.S. office space vacancy rate dropped 70 basis points from 12% to 11.3% in the year just ended, representing the biggest decrease since the recession ended, according to the analysis.  Vacancy rates for medical office properties were holding steady at a historically solid 9.6%, but all other vacancies were down across the board across markets, submarkets and building types and quality levels, CoStar said in the report.

Many markets are slipping below the vacancy average for U.S. office space, with nearly every metro registering year-over-year drop.  The single exception to this is the Washington, D.C. market, where vacancies rose minimally, primarily due to strong constructions activity.

One Costar analyst called the declining vacancies in office submarkets a “feel-good story across the country.”  Newer properties have enjoyed a stronger recovery, with vacancies for 2008 and newer buildings plummeting from a high of 45% in 2008 to nearly 10% in the last quarter 2014.  Older buildings from the 1980s, which are often located in less desirable outer-ring suburban submarkets, haven’t recovered at all as tenants tend to prefer Central Business Districts (CBDs) or the closer-in suburban markets, a CoStar analyst said.

The report also took note of the rising demand for high-quality space, with newer 4 and 5 Star space experiencing double the rate of absorption of lower-quality space.  High-quality space increased 2% from 2013 to 2014, in comparison to 0.9% for 1-, 2- and 3-star space, according to the report.

For more information about Philly office space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) or Leor Hemo (leor.hemo@wolfcre.com) at Wolf Commercial Real Estate, a premier Philadelphia commercial real estate brokerage firm that specializes in Philadelphia office space.

Wolf Commercial Real Estate is a Philadelphia commercial real estate broker that specializes in Philly office space, providing a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with extensive expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philadelphia office space with the Philadelphia commercial properties that best meets their needs.  As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties, including Philadelphia office space, to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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U.S. Office Space Market at Highest Level Since 2008 Recession

magnifying glassSpurred by job growth, rising rental rates and falling office vacancies, developers in several major markets have begun to break ground on new office projects, pushing U.S. office space construction to its highest level since 2008, according to a new report.

Approximately 86 million square feet of higher-end office properties larger than 50,000 square feet were under construction in 2014, an increase of 25.7%, an analysis of CoStar Analytics data shows.  This compares to 68.5 million square feet in 2013.  It is the highest level the industry has seen since year-end 2008, when 105.7 million square feet of new U.S. office space was under construction, the report said.

The analysis also noted that the total square footage of new office construction for 2014 is expected to increase further as CoStar learns about additional new projects breaking ground this year.

CoStar anticipates 44.5 million square feet of office space to be delivered by December 31, 2014, up 22% from last year.  As of September 30, new office construction starts totaled 42.6 million square feet, exceeding 2013’s total starts and providing ample new product into early 2017.

Analysts believe that recent robust leasing activity will alleviate any concerns about the potential for oversupply in the U.S. office space market.  Of the U.S. office space currently under construction, only 45 percent remains available for lease.  Major blocs of space already have been committed to by tech, creative and energy companies, such as such as Salesforce.com, Comcast, ConocoPhillips, Google, State Farm and LinkedIn.

Based on this year’s trends, CoStar predicts U.S. office tenants will take 77 million square feet of space by year’s end, up 77% from last year, and another 90 million square feet in 2015 and 2016.

With far less supply than demand, office vacancy rates are expected to decline until 2017, CoStar said.  A projected low office vacancy rate of about 11% should be reached in 2016 with continued national job growth and the disappearance of shadow space.

For more information about Philly office space or other Philadelphia commercial properties, ice space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) or Leor Hemo (leor.hemo@wolfcre.com) at Wolf Commercial Real Estate, a premier Philadelphia commercial real estate brokerage firm that specializes in Philly office space.

Wolf Commercial Real Estate is a Philadelphia commercial real estate broker that provides a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with extensive expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space with the Philadelphia commercial properties that best meets their needs.  As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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