Office Midwest

Asking rents reach new highs for office sector

Asking rents reaching new highs for office sector,ph01

Asking rents are on the rise. So is positive absorption. The first quarter Office MarketBeat report from Cushman & Wakefield, then, tells the story of a U.S. office office sector that continues to improve.

Released earlier this week, the report shows that the U.S. office market remains on an upward path that began in early 2011. According to Cushman & Wakefield, the average office asking rent across the country reached a record high of $31.97 a square foot in the first quarter of the year. This figure is up 1.5 percent from the fourth quarter of 2018 and 3.9 percent on a year-over-year basis.

The national average office asking rent has increased an impressive 29.7 percent from the second quarter of 2011.

In more good news? Cushman & Wakefield found that in 70 of the 86 office markets it tracks, asking rents rose. This is the most markets with rising rents since the last months of 2015.

New leases for office sapce hit 70 million square feet in the first quarter of 2019, down 6.3 percent from the 74.7 million square feet of new leases in the fourth quarter of 2018. A total of 6.7 million square feet of office space was absorbed across the United States during the quarter.

The Midwest cities of Chicago and Nashville saw plenty of new office construction in the fourth quarter. Cushman & Wakefield reported 5 million square feet of new office construction in both Nashville and Chicago during the quarter.

“U.S. economic activity is expected to remain steady in 2019, which should lead to stronger leasing volume and net absorption as we progress through the year,” said Ken McCarthy, principal economist with Cushman & Wakefield and Americas Head of Applied Research, in a written statement. “Asking rents are likely to continue to rise steadily, especially in tighter markets.”

McCarthy said that he expects the tech sector to lease the greatest amount of office space throughout the rest of 2019. He said that financial services companies and coworking providers should be strong leasors, too.