Here are some significant and noteworthy trends from the Office sector of commercial real estate in the first quarter of 2013, as explained by Dr. Victor Calanog, VP of Economics and Research at ReisReports:
- The office vacancy rate declined 0.1% to 17% at the end of the quarter, continuing the same slow pace of decline from 2012. This pace can be attributed to the lack of jobs created in the past few years, as Office market recovery is driven by job growth more than any other CRE sector.
- The labor market is showing steady improvement, with 195,750 new jobs created per month so far this year, slightly higher than averages from the previous two years. Most companies will only look for office space if they are “burgeoning” with new employees, according to Calanog.
- Marking the tenth consecutive quarter increase, asking and effective rents grew by 0.7%. Rent prices are still increasing at a marginal pace, further emphasizing the slow recovery rate of both the U.S. economy and the Office sector.
These key points tell us that similar to the economy, the Office sector is recovering, albeit at a very slow pace. The Office sector is projected to maintain steady improvement throughout the year. However, if economic growth were to take a turn for the worse, it is likely the Office sector will follow.
These figures were provided by ReisReports. For more information, check out their website at https://www.reisreports.com/.