Office Outlook: Vacancy Declines, Rents Rise in 2014
Office vacancy across the U.S. is
expected to continue declining next year, dropping approximately 80 basis
points to 14.3 percent by year-end, according a CBRE Group office market outlook.
The positive trend is expected to continue into 2015 with vacancy landing at
approximately 13.5 percent for the year.
“The office market recovery is
poised to accelerate in 2014, as an improving economy should result in
increased office-using employment. The growth in office-using occupations,
particularly in high-tech industries, is increasingly pacing demand for office
space,” says Arthur Jones, senior managing economist of CBRE Econometric
Advisors. “Home prices have also risen and will soon become an important source
of wealth to consumers, which should further bolster the strength of the
economy and aid the office market recovery.”
Rents are forecast to rise
slightly during the same period, increasing approximately 3 percent next year
and another 4.4 percent in 2015, according to the report.
“We should see a broader and more
sustained recovery in occupancy and rents in 2014 and beyond, as employers
continue to hire office workers and more markets bounce back from the housing
crisis,” added Mr. Jones.
Office development, which has hovered near
historic lows in recent years, is expected to remain subdued through 2015.
Markets with high growth among high-tech and energy-related industries, including
New York, Boston, Washington, D.C., Houston, Dallas, San Francisco, and San
Jose, Calif., will comprise approximately 70 percent of all new office development
through year-end 2016, according to the report.