As we approach the end of the second year of the pandemic, most return to office deadlines remain quite fickle. And although it is still uncertain how long it will take until the post-pandemic world Settled into its new normal rhythm, activity in key US office markets is pointing to a sense of optimism due to rising vaccination rates and declining new case trends across much of the country.

In fact, the most recent monthly office report issued by CommercialEdge noted that office vacancy rates in key markets are again on a downward trend, reaching 14.9% in September. Notably, the data analyzed showed a 50 basis points (bp) decline from the previous month, while still being 130 bps higher year on year (YoY). However, CommercialEdge analysts also noted that the largest increase in vacancy in 12 months was recorded in markets where new supply had been delivered in significant quantities.

For example, Austin, one of the most attractive US cities in recent years, has seen office vacancy rates increase by 510 bps over the past 12 months. However, the developers here have maintained a fairly generous local pipeline that has yielded 15% of the stock since 2017. At the end of September, another 10% of the stock was under construction. And with 8.7 million square feet of new office space in Austin under development, the city is currently home to the third largest pipeline under construction, behind Manhattan (with nearly 21 million square feet under construction) and Boston (13.3 million square feet). million square feet). ).

Similarly, the average vacancy rate for office space in San Francisco rose 510 basis points year-over-year in September. Again, the data shows significant pipeline returns: 11.2% of inventory delivered since 2017. And at the end of last month, the city’s projects under construction amounted to nearly 4.1% of inventory.

Meanwhile, the average full-service equivalent listing rate was $38.62 per square foot in the top markets surveyed for the report. While this was down $0.10 month-over-month, it was up 1.2% from September 2020. At an individual market level, the three largest rate hikes were recorded in the California and Florida markets. In particular, office rent in Los Angeles last month averaged $41.62 per square foot — an 8.1% year-over-year increase, which was the largest asking price growth among the markets analyzed.

In second place with 12-month increases of 6.2% each were the Bay Area — where rents averaged $55.79 per square foot in September — and Tampa ($29.70 per square foot). Meanwhile, average listing rates in Miami were $43.43 per square foot, which was 5.8% higher than the previous year, for the third-highest rate hike on the list.

For more information on how the top markets fared in the first nine months of the year, visit the CommercialEdge blog to most recent office rental report in the US, as well as investment analysis, pipeline data, and insights into economic recovery and recent trends in industry fundamentals.

Last modified: October 22, 2021

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