SANTA BARBARA— Rapid absorption of new supply drove a 1% increase in U.S. office rents in the first quarter of 2019. The highest increases occurred in markets with new projects that pushed up the average listed price, according to a new report from Yardi® Matrix.
Nearly 9 million square feet of office space came online through February; 7.9 million square feet was Class A space.
While San Francisco and New York City’s Manhattan and Brooklyn boroughs led in asking rates, growth and construction, development is increasingly coming from secondary markets and smaller markets with expanding downtown areas. Examples of such metros are Nashville, Tenn., Charlotte, N.C., and Austin, Texas.
The national vacancy rate remained steady at 13.7%.
Transaction activity in the first quarter was 37% lower than in the first quarter of 2018 and the lowest for a quarter since 2013. Seasonality, lingering effects of fourth-quarter capital market volatility and the federal government shutdown all contributed to the sales slowdown. “But there’s no reason to think demand has fallen off a cliff,” the report says.
Read the full Yardi Matrix national office report for April 2019.
Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, industrial, office and self storage property types.