Magazine article Mortgage Banking

C&W, CBRE: Office Demand Still Strong

Magazine article Mortgage Banking

C&W, CBRE: Office Demand Still Strong

Article excerpt

Demand for U.S. office space remained strong in the third quarter despite recent global volatility, sector analysts said.

Kevin Thorpe, chief economist with Chicago-based Cushman & Wakefield (C&W), said the U.S. office sector continues on a strong and steady path despite a number of global economic headwinds. "There were plenty of reasons for the office metrics to slump this quarter-financial market volatility, China's economic slowdown, the rapid appreciation of the U.S. dollar and uncertainty regarding monetary policy along with the possibility of a government shutdown," he said, but he added that "the property markets are proving time and time again to be resilient in the face of all of these headwinds."

Thorpe said the quarter yielded one of the strongest in the cycle in terms of occupancy gains. U.S. office markets absorbed 19.2 million square feet of space in the quarter. Though down in year-over-year terms, demand for office space continues to outstrip new development, which pushed vacancy rates down by 10 basis points from the previous quarter to 14.1 percent.

Jeffrey Havsy, Los Angeles-based CBRE's Americas chief economist, said economic fundamentals point to a "sustained" U.S. office expansion in 2015 as firms continue to hire workers and office market investment volumes stay high.

"The Federal Reserve's September decision to delay its interest-rate hike will help to keep interest rates down, further promoting real estate investment," Havsy noted. …

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