Office Midwest

Avison Young: U.S. office market holds steady at mid-year

U.S. office market holds steady at mid-year: Avison Young,ph01

Companies are continiuing to rethink their office needs as technology makes it easier for employees to work remotely. At the same time, others are looking for new office space in the center of urban areas as a way to attract the younger workers who prefer an urban lifesytle.

This combination is keeping office brokers busy as their clients continue to adjust their office-space needs, according to the latest research from Avison Young.

Avison Young last week released its Mid-Year 2018 North America and Europe Office Market report. And the results promise a busy office market for years to come as office users adjust how they think about the size, form and operations of their workspaces.

“Nowhere are we seeing more profound changes than in the office sector, especially in urban areas of major metropolitan markets,” said Mark Rose, chairman and chief executive officer of Avison Young. “The impact can be seen on city skylines, which are changing rapidly as new construction picks up pace, driven by insatiable tenant demand from organizations adjusting their workplace strategies to a growing millennial workforce and their adaptability to innovative technologies.”

Avison Young tracked the performance of 67 office markets in North America and Europe, markets making up more than 6 billion square feet. According to the company, office vacancy rates dipped in 38 of these markets, remained unchanged in seven and rose in 22.

During the most recent 12-month period, construction crews added nearly 74 million square feet of new office space across the markets. Another 138 million square feet was under construction as of the middle of 2018, with 50 percent of this space pre-leased.

“It’s great to see so much confidence on the part of developers as they respond to the supply-demand imbalance in many markets,” said Rose. “This time around, the new influences of disruptive technologies and increasing co-working space availability are also affecting how and where people work, potentially impacting the office sector from within, and challenging conventional wisdom.”

The U.S. office market was strong as of the middle of 2018, according to Avison Young. The market was helped by low unemployment rates, business expansion and rising consumer and business spending.

The total office vacancy rate in the United States stood at 12.1 percent as of June 30. That’s a drop of 10 basis points year-over-year. All but 13 of the 46 U.S. markets studied by Avison Young reported vacancy rates averaging more than 10 percent.

Vacancy rates were lower in downtowns, standing at 11.2 percent at mid-year 2018.