Magazine article Mortgage Banking

Office Sector Improvement Continues

Magazine article Mortgage Banking

Office Sector Improvement Continues

Article excerpt

* U.S. businesses continued to fill up vacant office space--slowly--in the third quarter, reported Cassidy Turley, Washington, D.C.

"Demand for office space is still subpar but, nevertheless, it has been consistently positive for multiple consecutive quarters," said Kevin Thorpe, Cassidy Turley's chief economist. "At the same time, new supply remains extremely constrained. In fact, demand for office space has now exceeded new supply for over two years. So the office sector is clearly tightening in most cities across the country."

U.S. office markets absorbed 12.8 million square feet of office space in the third quarter, down from 15.6 million square feet in the second, Thorpe said.

CBRE Group Inc., Los Angeles, reported office vacancy dropped 10 basis points to 15.1 percent as of Sept. 30. The sector's slow progress "remains consistent with a growing but fragile economy," said Jon Southard, managing director of CBRE Econometric Advisors, Boston.

"While the partial federal government shutdown has added more uncertainty, it is likely to be a short-term disruption at the national level," said Southard. "The office market has performed as well as can be expected in light of the uncertainties. Private hiring has remained healthy over the past year, with businesses adding 190,000 new jobs each month through August. [In addition,] the dearth of new office construction will continue to help the market to recover."

The third quarter closed with 55.3 million square feet of office property under construction, up from 54. …

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