Archive for the ‘Trends and Statistics’ Category

Mid-2022 Atlanta Commercial Real Estate Market Overview

August 8th, 2022

Office Space

As of Q2 2022, we’re continuing to see signs of Atlanta’s increased post-pandemic recovery when compared to its peers. Office occupancy rates have shot up dramatically since Q2 2021, though leasing overall has still not reached pre-pandemic levels. Major players — including Google, Microsoft, Visa, and Airbnb — have been in the process of opening up thousands of high salary jobs in offices throughout Atlanta, heavily contributing to the increased positive sentiment that has permeated throughout the office sector in 2022.

Rents have settled after the turbulent events of the early 2020s. Vacancy rates in the metro are still sitting around 18%, making it harder for providers to hike rates. Overall vacancy rates have dropped from 18.8% in Q1 2022 to 18.4% in Q2, providing more evidence of recovery. Despite this, vacant square footage by volume has increased in the metro area, with just over 43 million sq/ft vacant in the middle of 2022 representing a rise compared to the same time in 2021, which saw 42 million sq/ft of vacant office space.

Vacancy rates in Midtown are down to 19% in Q2 2022, compared to 22% in Q2 2021. South Atlanta still shows the lowest vacancy rates across the metro area at 11.7%, though this is up from the Q2 2021 figure of 10%. Despite this increase, recovery is still trending positively when compared to other areas in Atlanta — though reaching the healthy metrics of 2019 is still a ways off. Read the rest of this entry »

US Office Market Trends 2022 – Statistics, Challenges and Outlook

February 24th, 2022

The US office market struggle to get back on its feet for most of 2021, despite the year starting with the expectation that this arm of the commercial real estate market would be on its way to recovery by Q3 to Q4. Ultimately, the emergence of the Delta and Omicron variants of COVID-19 resulted in forecasts being revised, and the recovery horizon was pushed to 2022.

We’ve collected a brief overview of the trends, figures, and projections for the 2022 US office space market below, check back frequently in the year ahead for more insight into industry trends and recovery projections.

Economic Indicators Tipped to Improve

There are many factors influencing office market performance, but macro-economic indicators are some of the most critical. As we settle into 2022, a decline in unemployment is expected to be one of the most important factors underscoring the recovery of the office market. Recent data from the U.S. Bureau of Labor Statistics outlined a small uptick in unemployment in January 2022, moving from 3.9% at the end of 2021 to 4.0% to end the first month of the new year. Read the rest of this entry »

January 2022 – U.S. National Office Market Report

February 11th, 2022

Notable Office Market Insights

  •  Ongoing recovery is the main theme, continuing the trend seen in most office markets throughout 2021.
  •  Positive absorption indicators.
  •  Slight increase in rental rates.
  •  Marked differences in occupancy levels, vacancy rates and general performance from city to city.
  •  Remote working practices are still commonplace in key markets, such as San Francisco.
  •  142 million square feet of office space currently under construction.

Lease Rates & Asking Rents

Recent data from Commercial Edge outlines a nationwide rental listing rate average of $38sq/ft in January 2022. These figures may be seen as somewhat inflated due to the number of high quality spaces currently listed due to being vacant, with Class A workspaces being listed at much higher prices.

According to Avison Young, Q4 average rental prices per square foot in gateway markets were as follows:

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The Great Resignation or the Great Retention? How Employers Yield the Power Heading into 2022

December 15th, 2021

In September 2021, 4.4 million Americans quit their jobs. This staggering statistic, combined with the fact that one in four workers had already left a job in the last 12 months, illustrates the clear reality that workers are resigning at significantly higher rates than prior to the COVID-19 pandemic. Despite the turmoil the pandemic has brought to the United States economy, workers seem more willing than ever to pivot careers and quit their jobs.

Origins of the Great Resignation

In the 20 years prior to February 2021, the resignation rate in the United States had never surpassed 2.4% in any given month. However, around a year into the COVID-19 pandemic, this changed. Typically, resignation rates are seen to decrease during periods of high unemployment, as was seen in the immediate wake of the pandemic and the uncertainty it generated. More recently, experts have discussed the so-called ‘Great Resignation’, a phrase that is linked to the recent shift that has seen employees leaving their jobs to explore other options.

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United States Commercial Property Supply and Vacancy Rates 2021 (Part 2)

February 25th, 2021

In a previous blog post we examined the performance of the commercial real estate market in some major US cities. This is the second article in this series, which uses data from late 2020 and early 2021 to examine vacancy and supply rates in cities such as Los Angeles, Chicago, Atlanta and Houston. These statistics illustrate the impact of COVID-19 on the commercial property rental market, as well as the types of properties that are holding strong in the face of negative trends.

Los Angeles

Los Angeles is a hub for creative, media, and entertainment companies, many of which are office-based. The city’s proximity to major cargo ports makes it convenient for logistics and distribution businesses, both of which have kept the industrial real estate market strong.

Offices

  •  Vacancy rates in downtown Los Angeles are 21.5%.
  •  In Q4 20202, there was more than 5.5 million square feet for vacant space, with 3.4 million feet being in the Financial District.
  •  The majority of vacant inventory involves Class A offices.
  •  Supply increased by more than 2 million square feet in the past 12 months.
  •  No new supply is expected to enter the market as no projects are currently under construction in the CBD area.
  •  Vacancy rates average 22.5% outside of the CBD, however, they reach 56% in the Fashion District.
  •  Vacancy rates are just under 18% in the Greater Los Angeles area.

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United States Commercial Property Supply and Vacancy Rates 2021 (Part 1)

February 11th, 2021

With a market size of nearly $900bn, the United States has one of the world’s largest commercial real estate markets, coupled with some of the most desirable business locations to match. This post serves as the first part of our examination into the US market’s performance based on data from Q4 2020 and Q1 2021.

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United States Office Rental Market – Trends for 2021

January 27th, 2021

Commercial real estate was one of the hardest hit sectors following the coronavirus outbreak in 2020. The pandemic and the measures taken to curb its spread brought significant changes to office-based workplaces, driving a sharp and sudden increase in remote work practices. The most immediate consequence of this shift was a softening in rental activity due to the decreased need for physical office space in the short-term. As a result, 2020 ended with a marked decline in take-up volume and an increase in office vacancy rates across the nation.

The United States office rental market entered the new year in a scenario marked by declining rental rates and compromised fundamentals. As we move further into 2021, these trends are likely to remain in place and some markets may begin to feel the full impact of the economic crisis, whereas others will prove more resilient.

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United States Office Space Rental Rates 2020

December 22nd, 2020

The United States office market is characterized by its wide range of properties, ranging from affordable shared spaces to expensive trophy offices in some of the world’s most desirable business locations. In mid-2020, average gross rates for offices nationwide stood at $35 per square foot with the priciest offices located in New York and California. Within these states, the sub-markets commanding the highest rates are:

  •   New York: Midtown Manhattan at $87 per square foot, specifically in Chelsea, the Plaza District, and Gramercy Park.
  •   California: The Shoreline/Mountain View area, in which prices reach $130 per square foot, followed by Santa Monica and the SoMa district of San Francisco.

Average asking rates in other prime office markets are as follows:

  •   Seattle: $70 per square foot, higher in Lake Union and the CBD.
  •   Washington DC: $55 per square foot.
  •   Cambridge and Boston: $40 and $80 per square foot, respectively.
  •   Los Angeles: Averaging $45 per square foot.
  •   Chicago: Exceeding $40 per square foot in the West Loop.
  •   Raleigh-Durham: $35 per square foot for CBD properties.

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United States Commercial Property Prices 2020: Per Square Foot

December 15th, 2020

The United States is home to one of the world’s largest commercial real estate markets, with an estimated worth of approximately $950bn. In terms of size, industrial space is the largest sub-market with 21bn square feet, followed by retail with 13bn, and offices, which account for 11bn.

In Q2 2020, the average price per square foot for US offices was just over $35. Retail averaged out to $18.09 / square foot, and industrial space came in at just under $8 / square foot. However, there are significant variations in average prices based on location and real estate class. Here is a summary of average commercial rates in key USA cities:

  •   New York: Average gross rates for metro New York offices are $81 / sq ft / year. Industrial space averages $19 / sq ft / year.
  •   Los Angeles: $44 / sq ft / year for offices in the metropolitan area and $11 / sq ft / year for industrial premises.
  •   Miami: In the same range as Los Angeles for CBD offices and slightly lower for industrial space ($8 / sq ft / year).
  •   Boston: $39/ sq ft / year for metro offices, rising to $80 in Cambridge. Industrial properties average $10 / sq ft / year.
  •   Philadelphia: $36 / sq ft / year for city center offices, $27 for suburban space, and $6 / sq ft / year for industrial properties.
  •   Atlanta: Slightly under $30 / sq ft / year for offices with a rate of $35 in Downtown Atlanta. Industrial space is charged at an average of $5 / sq ft / year.
  •   Chicago: Approximately $33 / sq ft / year for office space, rising to averages above $40 in The Loop. Industrial premises average $6 / sq ft / year.
  •   Dallas and other urban centers in Texas: between $25 and $30 / sq ft / year, whereas industrial rates are below $5.

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How Shrinking Office Spaces In New York City Mean Less Privacy For Employees

June 25th, 2019

People on laptops in an open plan workspaceNew York City is home to more than 500 million square feet of office space, which make it one of the world’s largest office markets. While that seems a large amount, space shortages are a reality, and not only in terms of the offices available. Rising rental values mean that many New York companies are choosing to downsize or to make changes to their office layout to maximize space and cut costs. Nowadays, it is not uncommon for companies to move to office premises that are up to 25 percent smaller, yet the amount of people sharing that space remains the same.

Another way in which the amount of office space allocated to each staff member is getting scarcer is because of current trends towards open plan offices and collaborative spaces. The concept of the sharing economy has extended into office design and space allocation, with shared workspaces becoming increasingly more common, which means individual desks are being replaced by large long tables. In fact, New York leads the nation’s provision of shared office space, and even in traditional offices there have been changes in the desk space – meeting or collaborative space ratio, with the balance switching towards the latter.

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