UK office space rents up despite leasing slowdown, report shows
26-04-2012
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The overall average asking rental rate for US CBDs increased to $37.70 per square foot at the end of the first quarter, the highest level since the first quarter of 2009, when the average asking rental rate was $39.50 per square foot.
Overall rental rates increased $0.49 from $37.21 per square foot at the end of 2011, and were up 5.2% from $35.85 per square foot at this time last year.
Eighteen of the 30 US CBD office markets tracked by Cushman & Wakefield reported a quarterly increase in average asking rents, while 12 recorded a decrease. Markets with the largest quarterly increases included San Francisco up $3.60 to $46.12 per square foot, Midtown South Manhattan up $2.55 to $48.45 per square foot, Midtown Manhattan up $1.26 to $66.68 per square foot, Houston up $0.75 to $31.88 per square foot and Chicago up $0.56 to $31.84 per square foot.
The increase came despite a slowdown in overall leasing activity in US CBDs. Companies signed 15.6 million square feet of office leases in the first quarter of the year, a 16.3% decline from the 18.2 million square feet signed in the first quarter of 2011.
‘Leasing activity softened in the first quarter of the year, a continuation of the slowdown seen at the end of 2011,’ said Maria Sicola, executive managing director of research for Cushman & Wakefield in the Americas.
‘While this trend could continue through the second quarter, we expect a noticeable pickup in activity in the second half of the year,’ she added.
While leasing activity did slow, it had little effect on the overall vacancy rate, which remained at 13.5% at the end of the first quarter.
Overall absorption, that is the net change in occupied space, was positive for the first three months of 2012, totalling 1.3 million square feet, an improvement from the 733,161 square feet of positive absorption at this time last year.
No new office construction was completed in the first quarter, and only 747,965 square feet of new construction is expected to be added to the US CBD market this year.
