NEW YORK, ny – Jan. 22, 2014 – New leasing activity in U.S.
office markets rebounded in the fourth quarter of 2013 with 19.5 million square
feet of activity, the highest quarterly jump in a year, according to Cushman
& Wakefield’s fourth quarter statistics for the U.S. office market.
Overall leasing activity for the U.S Central Business
District (CBD) office market totaled 68.1 million square feet for the year with
an additional 137.8 million square feet of suburban activity, an increase of
5.9 million square feet from 2012.
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| Maria Sicola |
New York’s Midtown Manhattan office market paced the nation
with 4.5 million square feet of leasing activity in the fourth quarter.
Downtown Manhattan (1.8 million), Chicago (1.3 million), Boston (1.2 million)
and San Francisco (1.2 million) each saw leasing activity surpass one million
square feet of activity for the quarter.
Total leasing activity in San Francisco totaled two million
square feet for the quarter, bringing year-to-date leasing up to 7.2 million
square feet – a record leasing year for the market whose 10-year average was
only 5.8 million square feet.
“The technology and the energy markets remain strong,” said Maria
Sicola, Executive Managing Director and Head of Americas Research for
C&W.
“San Francisco, Boston, Houston and Denver are the markets
that are seeing quite a bit of the activity and remain resilient. It’s a great
start for those markets, but the other more pressing factor is going to be
other industries recovering and expanding beyond technology and energy.”
Midtown Manhattan led the nation in overall leasing
activity, with 16 million square feet of activity year-to-date. That total was
9.8 million more than Downtown Manhattan, which was second in C&W’s
national rankings. Houston paced suburban markets with 13.9 million square feet
of activity for 2013.
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| Manhattan Midtown |
The overall vacancy rate for U.S. CBDs changed very little
year-over-year, rising from 13.1 percent in the final quarter of 2012 to 13.5
percent in the fourth quarter of 2013.
The quarterly change was even less, rising 0.1 percentage
points from the third quarter of 2013. Overall, 17 U.S. CBDs saw a drop in
vacancy for the quarter. The largest quarter-over-quarter declines were in
Hartford, Conn. (down 7.03 percent), Phoenix (down 2.6 percent) and Silicon
Valley (down 1.6 percent).
Overall rental rates averaged $41.74 per square foot for
U.S. CBDs for the year – a seven percent increase of $2.79 from 2012.
Quarter-over-quarter, national rental rates rose $0.77.
Manhattan’s Midtown South market saw the highest quarterly
change, leading the nation with $62.61 per square foot asking rents, a $2.27
change quarter-over-quarter. Downtown Manhattan was just behind it with a $2.26
change, totaling $48.26per square foot rental rate for the fourth quarter of
2013.
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| San Francisco's Golden Gate Bridge |
Midtown Manhattan, Midtown South, San Francisco, Fairfield
County, Conn., Washington D.C., Downtown Manhattan and Boston were the only
U.S. CBDs to outpace the national rental rate average. Overall absorption – the
net change in occupied space – was positive year-over-year for U.S. CBDs, with
16 markets seeing positive overall absorption for the year.
That gain was slim, however, with overall CBD absorption
only totaling 437,844 square feet. Chicago (1.3 million) and Boston (1.1
million) saw the nation’s largest changes in CBD absorption.
“The absorption was very strong in the suburbs, while the
CBDs struggled,” Ms. Sicola said. “Fortunately, there was a rebound, and it is
a reflection of the national movement into our cities. We are seeing tenants
that want to migrate into the CBDs. That’s mostly a core market phenomenon in
places like Boston and San Francisco.”
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| Chicago's South Loop District |
Construction in U.S. CBDs saw 6.4 million square feet of
completions in 2013 with two million of that total coming directly from
Downtown Manhattan.
Only six markets saw construction activity in their CBDs. An
additional 12.8 million square feet is expected to be completed over the next
two years, with Downtown Manhattan seeing the most gain with three million
square feet of construction expected in 2014.
Silicon Valley’s suburban market will also see a surge in
construction this year, with an additional three million square feet expect for
completion
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