CBRE U.S. Office MarketView · 2012-05-25 · Current Qtr. Yr. Vacancy Rate 16.0% Lease Rate $25.31...

EXECUTIVE SUMMARY

• Officemarketfundamentalsshouldcontinuetosee

improvement, especially inmarketsdrivenby the

hightechsector.

• Softofficeleasingfundamentalshavebeenoffsetby

strongercapitalflows,especiallyforhigher-quality,

ClassAproduct.Yield-orientedinvestors,however,

willbegintofanouttosecondarymarkets.

• Office investors in keygatewaymarketswill con-

tinue to accept lower returns given the still-low

interest rate environment. They should consider

underwritingmuchhigher interest rates,however,

inthemediumterm.

ECONOMIC TRENDS

U.S.economicdataturnedincreasinglypositivebeginning

inthefourthquarterof2011.Riskassetsralliedsignificantly

inQ12012,reflectingbetterjobsandGDPdata,aswell

as the continuation of accommodative Federal Reserve

monetarypolicyandreducedtaileventriskinEurope.The

EuropeanCentralBank’sliquidityoperationsandthesuc-

cessfulcompletionofGreece’sdebtrestructuringrendered

thesovereigndebtcrisis inEuropelessofathreattoU.S.

economicgrowththisyear.Morerecentmarketvolatilityon

thebackofconcernsregardingrenewedfearsofaEurozone

debtcrisisseemstobeoverdone.

Economic Growth and Office Employment: RealGDP

growthaveraged3.0%duringQ42011,largelystemming

from a surge in inventories. The latest Federal Reserve

BeigeBookwasbrighterintoneaswell,withmostdistricts

reportingamodesttomoderatepaceofgrowth.Withrising

vehicle purchases andwarmerweather fueling increased

consumer spending,weexpectU.S.GDPgrowth toaver-

agebetween2.0% to2.5% in2012and2013.This rate

remainsbelowtheestimatedU.S.growthtrendrateof3.0%

givenuncertaintiessurroundingafiscaldraglaterthisyear.

Anumberoftaxbreaksaresettoexpireanduncertaintyis

pervasiveregardinganyresolutionaroundtheU.S.federal

budget going forward. Geopolitical tensions and anxiety

aboutworldoilsupplieshavealsodrivenupoilprices.In

turn, rising gasoline prices at the pumphas emergedas

akey risk to the strengthofU.S.economicgrowthgoing

forward.

Employmentgainshavegenerallybeenmoreupbeatuntil

this most recent month. Up until March, the U.S. labor

markethadbeendoingbetter thanmostothereconomic

indicators.U.S.firmsaddedonly120,000jobs inMarch,

far fewer than the consensus expectations of 200,000.

Theaverageof thepast threemonths,however, suggests

abrighterpictureforjobs.Duringthefirstthreemonthsof

2012, job gains averaged 212,000 permonth, and the

unemploymentratefellto8.2%.

Theunusuallymildwinterweathermayhaveshiftedhiring

forward,especiallyinretailandconstruction.Weexpectthe

labormarkettocontinueimprovingthisyearandbeyond.

Manyotherindicatorscorroboratestrongerjobgainsgoing

©2012,CBRE,Inc.

Q1 2012

CBRE

www.cbre.com/research

Global Research and Consulting

U.S. Office MarketViewOffice Outlook: Seeing Through the Fog

Figure 1: The U.S. Economy and the Labor Market (Annual Percent Change)

2005 2008 20122009 20132006 2007 2011 2015 2016 20172010 2014

12%

10%

8%

4%

6%

2%

-2%

-4%

Real GDP GrowthUnemployment Rate

Source:IHSGlobalInsight,March2012

-6%

0%

Forecast

©2012,CBRE,Inc.

GLOBAL RESEARCH AND CONSULTINGQ

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forward,includingdecliningjoblessclaims,afallinjob

cutsasannouncedbyChallenger,betterISMjobmet-

rics,andreportedincreasesintheriseindemandfor

workersatsmaller-andmedium-sizedfirms.For2012,

weexpect jobgains toaverage165,000 to185,000

permonth.Jobgainsshouldaccelerateby2013.The

unemploymentratewillcontinuetofalltobelow8.0%

overthenexttwoyears.

Akeydriverofofficeabsorptionisoffice-usingemploy-

mentintheFinance,InsuranceandRealEstatesectors

aswellasProfessionalServices.Figure2tracksgrowth

in“officeemployment”whichcombinesthesetwosec-

tors.Officejobgrowthslowedmarkedlyinboth2008

and2009,registeringamuchsharperdeclinethanthe

overalldeteriorationintotalemployment.Thefinancial

sector,inparticular,wasattheheartofthelatestdown-

turn, leading to a disproportionate share of layoffs.

Since thedownturn,however,bothfinancial corpora-

tions and non-financial corporations have improved

theirbalancesheets.Thedeleveragingprocessacross

U.S.bankshasbeenvery successfuland thedebt-to-

nominal GDP ratios among U.S. banks are back to

2002historicallevels.Non-financialcorporationshave

pristinebalancesheets,sittingonanestimated$2tril-

lionincash.

Goingforward,firmswillcontinuehiringasitisincreas-

inglydifficulttogetmoreoutputfromtheirexistinglean

workforces.Officeemploymentshouldcontinuetore-

boundin2012andreallygainsteamin2013,driving

betterabsorptionofofficespaceoverthemediumterm.

Business Spending: More recently, market partici-

pantshavegrownincreasinglyconcernedaboutslow-

inggrowthinEuropeandChinaandwhatthepotential

impactmaybeontheU.S.growthtrajectory.Webelieve

thattheserisksareoverblowninlargepartsincethere

issignificantpent-updemandbybothconsumersand

U.S. corporations that should drive robust domestic

demand incomingquarters.Weexpect thatbusiness

spending, especially on software and equipment,

should supportU.S. economicgrowthgoing forward.

Asnoted,businessesremainflushwithcashandthey

need to address replacement needs that have been

neglectedduringthepastrecession.Spendinggrowth

shouldaveragearound8%peryearthrough2013.

Consumer Spending:Consumptionaccountsforthe

largestportionof theU.S.economyand its trajectory

iskeytooureconomicgrowthforecastgoingforward.

Realconsumerspendinghasheldupbetterthanwhatis

suggestedbysentimentreadings.Improvinghousehold

balancesheetsandstrongerlabormarketsaresupport-

ing increased consumption among U.S. households.

RecentreportsfromtheFederalReserve’sFlowofFunds

report indicate continued improvement in household

finances. Buying power has also improved given the

dramaticeasingincreditconditionsthisyear.Theratio

ofhouseholdliquidassetstoliabilitiesroseduringQ4

2011,given thesharp rally in stockprices. Improved

householdfinancesandeasingcreditconditionsshould

supportmodestgainsinconsumerspendingin2012.

Thedataalsosuggeststhathouseholddeleveragingis

nolongerathreattoU.S.economicexpansion.

Consumers, however, face a number of headwinds

including still-high debt burdens, house prices that

continuetofall,lackofmeaningfulwagegrowth,and

Figure 2: Office-Using Employment (Annual Percent Change)

2005 2008 20122009 20132006 2007 20112002 2003 2004 201020012000

6%

4%

2%

-2%

-4%

Source: Economy.com and CBRE Econometric AdvisorsOfficeOutlook data as ofQ42011

-8%

-6%

0%

Forecast

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aseverelackofconfidenceinthegovernment’sability

to execute policies that improve economic prospects.

Overall,ourexpectationforconsumerspendinggrowth

is1.9%thisyear,andconsumptiongrowthshouldac-

celerateto2.5%in2013.

Modesteconomicgrowth,healthierfinancialinstitutions

and the greater need by businesses to cure deferred

CAPEX investments should support greater demand

foroffice-usingworkers.The likelihoodthoughis that

recoverywillbemoderateatbestinthenear-termuntil

astrongerrecoverytakesrootafter2013.

OFFICE CAPITAL MARKET TRENDS

Officetransactionvolumesincreasedby37%in2011,

totaling $63.5 billion as reported by Real Capital

Analytics(RCA).Thisincludesthesaleofapproximately

2,200officeassets.CBDofficeproperty continued to

account for themajority of sales.Cap rates forCBD

marketslocatedinBoston,Chicago,SanFrancisco,and

LosAngelescontinuedtocompress.Bycontrast,office

cap rates inManhattanand theDistrict ofColumbia

havestabilized.RCAreportsthatinvestorsareshifting

focus to the higher quality office assets in suburban

markets. Most of the sales in 2011 were comprised

of single-asset deals, with portfolio transactions less

frequent. During Q1 2012, CBD office transactions

continue to dominate investment activity. However,

totalsaleshavebeenmodestyeartodate.AstheU.S.

economycontinuestogrowmodestly,weexpectgreater

officeinvestmentvolumein2012ascomparedto2011.

Thetotalreturnforofficepropertyasmeasuredbythe

NCREIFPropertyIndex(NPI)was13.65%in2011,trail-

ingthe14.26%overallNPIreturn.Officereturnswere

amongtheweakestinthepropertysectors.Despitethe

modestgains in returns,marketswith largeexposure

tothehightech,healthcareandenergysectorsoutper-

formed.Officereturns in theBoston/Cambridge,San

Francisco,SanJoseandSeattleCBDsallachievedtotal

returns in excess of 23.0%. By contrast, office return

performanceintheWashington,DC,areahasslowed

giventheuncertaintyregardingdeficitreductionmea-

suresanditsimpactonlocalmarketfundamentals.

Whilewe continue to expect improving officemarket

fundamentals, investment performance of properties

maycomeunderpressure.Officerentsmaycontinue

to rolldownasexisting leasesexpire,placing further

downwardpressureonbuildingnetoperatingincome.

Moreover,giventhemodestgrowthexpectationsforthe

U.S. economy in the near term, further appreciation

trendsmayalsoslow.Asaresult,NPIofficereturnsthis

yearshouldtrailthoseseenin2011.

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OFFICE MARKET CONDITIONS

Theofficemarketremainshighlybifurcated,withdowntownofficespaceintheprimarymarketsimprovingsolidlywhile

marketconditionsinthesuburbanofficesectorremainsoft.Averageofficevacancyratesacrossbothdowntownand

suburbansubmarketswereunchangedat16.0%inQ12012.Despiteimprovedjob

gains in theU.S., shadow vacant office space continues toweighonofficemarket

fundamentals.Thedowntownmarketshadoutperformedthroughmuchof2011,with

vacancyratesdownto12.7%byyear-end2011comparedto17.8%forthesuburbs.

InQ12012,suburbanofficemarketsoutperformedthedowntownmarketsasCBD

vacancy rates actually increased by 10 bps. A recovery in small business hiring is

improving the less-costly suburbanofficemarkets.Spreadsbetweendowntownand

suburbanofficemarketsstillremainhigh,however.

Corporate occupiers have also taken advantage of low office rents and increased

concessionstoleasebetterqualityspace.The“flighttoquality”hasledtosignificant

improvements in theClassAofficestock inmostmarkets. In thestrongestmarkets,

wheredemandforqualityspaceisgreaterthanwhatisavailable,rents,concessions

andTIpackagesaremovinginfavorofthelandlords.Capratesonsuchhigh-qualityofficeassetsingatewaymarkets

continuetocompress.Inlightofpersistentbroadermarketvolatilityanduncertainty,risk-averseinvestorsappreciate

thesecurityofsteadycashflowfromhigher-qualityofficeassetswithTriple-A-creditcorporateoccupiers.During2012,

therelativelyhighvaluationsforClassAspacemayencourageyield-hungryinvestorstoshifttosecondarymarketsand

ClassB/Cofficespace.

Officemarketfundamentalsshouldcontinuetoimprovethrough2012.Recentemploymentdata,especiallyintheoffice-

usingservicesector,hasbeenmorepositive.Thelackofnewsupplyisanotherimportantfactorinthesustainedimprove-

mentinofficemarketconditions.Weexpectthebetter-qualityofficespacelocatedintheCBDstoleadtherecovery.

National Quick Stats

Change from last

Current Qtr. Yr.

Vacancy Rate 16.0%

Lease Rate $25.31

Net Absorption* -0.70 MSF

Construction 1.5 MSF

*Thearrowsindicateatrendanddonotrepresentapositiveornegative value for theunderlyingstatistic (e.g.netabsorptioncouldbenegative,butstillrepresentapositivetrendoverthetimeperiod).

Figure 3: U.S. Suburban Supply and Demand

2007

Q120

07Q2

2007

Q320

07Q4

2008

Q120

08Q2

2008

Q320

08Q4

2009

Q120

09Q2

2009

Q320

09Q4

2010

Q120

10Q2

2010

Q320

10Q4

2011

Q120

11Q2

2011

Q320

11Q4

2012

Q1

CompletionsAbsorption

Vacancy Rate

Source:CBREEconometricAdvisors

-5

16%

12%

8%

-15 7%

2018%

14%

10%

25 19%

-10

15%

11%

10

15

17%

13%

9%

5

Completions and Absorption (millions of square feet) Vacancy Rate (%)

0

Figure 4: U.S. Downtown Supply and Demand

2007

Q120

07Q2

2007

Q320

07Q4

2008

Q120

08Q2

2008

Q320

08Q4

2009

Q120

09Q2

2009

Q320

09Q4

2010

Q120

10Q2

2010

Q320

10Q4

2011

Q120

11Q2

2011

Q320

11Q4

2012

Q1

CompletionsAbsorption

Vacancy Rate

Source:CBREEconometricAdvisors

-2

11%

-6

9%

-10 7%

813%

10 14%

-4

10%

-88%

4

6

12%

2

Completions and Absorption (millions of square feet) Vacancy Rate (%)

0

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Whileyear-over-yearvacancyisdown40bpsintheU.S.DowntownOfficemarketsoverall,itincreased10bpsquarter-

over-quarterinQ12012,suggestingaslowingintherecovery,asfirmshaveretrenchedinresponsetouncertaintiesin

theglobaleconomy.Recentpositivetrendsinemploymentandleasingactivityincertainindustriessuchastechnology

haveresultedinamixedpictureamongseveralmajorU.S.officemarkets.Marketsstronginthetechnologysector,like

SanFranciscoandSeattle,experiencedthehighestlevelsofpositiveabsorption.Newphraseslike“BisthenewA”and

“BCool”enterourcommercialrealestatejargonastechnology/information/mediafirmsincreasetheirfootprintand

moretraditionalusersofofficespace,suchasfinancialandrelatedprofessionalservicesfirms,pausetoweightheir

options.BothManhattanandWashington,DC,experiencedaslowstartto2012whileChicagocontinueditsstreakof

positiveabsorption.

OFFICE MARKET SNAPSHOTS

New York

The Manhattan office market, which boasts the low-

est vacancy rate in theU.S.,hadaslowstart to2012

as many corporate tenants respond to an uncertain

economic environment with a wait-and-see posture.

Negativeabsorptionof3millionsq.ft.resultedina10-

bps increase in vacancy quarter-over-quarter to7.6%.

ThisisinstarkcontrasttoQ12011,whennegativeab-

sorptiontotaled104,000sq.ft.Thebulkofthisnegative

absorptioninQ12012,or2.1millionsq.ft.,occurred

intheMidtownmarket,wheretherecoverywhichstarted

inthesecondhalfof2010hasslowed.Midtownleasing

activityfellshortofthefive-yearaverageforeverymonth

ofthequarterandfellshortofQ12011activityby39%,

astypicalMidtowntenantssuchasfinancialandprofes-

sionalservicesfirmsdelayedmakinglong-termleasing

decisions. Three out of the four transactions above

100,000sq.ft.inMidtownwererenewals.

AbrightspotinManhattanhasbeentheMidtownSouth

submarket,whichisparticularlyattractivetocreativeand

technologyfirms.Leasingactivityhashoveredjustabove

the five-year average everymonth during 2012.With

vacancyat6%,thisisthetightestofthethreeManhattan

markets.Italsoexperiencedrentalrategrowthof$3.45

quarter-over-quarter. TI allowances have also come

downaslandlordsnegotiatefromastrongerposition.

TheManhattanmarkettowatchremainsDowntown,with

roughly7.8millionsq.ft.ofofficespacepotentiallycom-

ingonlinebyyear-end2015.FourWorldTradeCenter,

with2.3million sq. ft., isexpected tobeavailable for

tenantconstructionattheendof2013,followedbythe

3million-sq.-ft.1WorldTradeCenter inearly tomid-

2014.Ontheheelsofa1million-sq.-ft.leaseattheend

of2011,CondéNast’s139,000-sq.-ft.expansionat1

WorldTradeCenterduringQ12012addsconfidence

to theviabilityanddiversenatureof thismarket.With

theMidtown / Downtown pricing delta at 37%, large

blocksofavailabilityathistorichighsandanimpending

wealthofnewClassAconstruction,Downtownwillbea

considerationformanytenantsinthemarket.

Washington, DC

ThevacancyrateintheWashington,DC,Downtownof-

ficemarketincreasedby40bpsinQ12012to10.2%.

Themaindriverofover500,000sq.ft.ofnegativeab-

sorptionwasGSAmove-outs, particularly in theCBD,

as leasing by the federal government, under pressure

to become more efficient and cut spending, virtually

groundtoahalt.Withafairlylargeinventoryofshadow

space, includingover300,000sq.ft.ofSecuritiesand

ExchangeCommissionspaceatConstitutionCenter in

Southwest,GSAleasingisprojectedtobelimitedforat

leastthenextsixmonths.Q12012sawonlyoneGSA

lease transaction of approximately 30,000 sq. ft. By

contrast,theGSAleasedatotalofover660,000sq.ft.

inQ12011,andsignednineteenofthelargesttransac-

tionsovertheyear.

Lawfirms,historicallyactivelessorsofofficespaceinthe

Downtownmarket, have exhibited a tendency toward

smaller average deal size and a focus on space ef-

ficiencies.WhilethelargesttransactioninQ12012was

signedbylawfirmGibsonDunnat205,000sq.ft.,the

averagelawfirmdealsizehasshrunk.

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Theprofessionalservices industryadded2,000jobsin

the January 2011 to January 2012 time period, and

otherservicesadded3,100jobs.Thesegains,however,

wereoffsetbyadecreaseof4,100jobsinthegovern-

ment sector, as pressure to cut back and uncertainty

aroundthepresidentialelectiontookhold.

Despite the softened fundamentals, developers are

positioningandmarketingnewprojectsinthehopesof

meetingdemandwhenthemarketrecovers.Withover

6million sq. ft. of space either site-plan-approved or

significantly through the approval process, new con-

structioncouldbeginoncedemandpicksuporalead

tenantcommits.

Chicago

TheDowntownChicagoofficemarketexperienced the

fourth-highestlevelofpositiveabsorptioninthecountry.

Thiswastheseventhstraightquarterofpositiveabsorp-

tionfortheCBD.Thevacancyrate,at14.9%,declined

30bpssince lastquarterand170bpsyear-over-year.

This is in starkcontrast to thesuburbanofficemarket,

withavacancyrateof22.6%,andamuchslowerrecov-

ery.Moresuburbantenantsareweighingtheoptionof

movingdowntowntotapthelarge,well-educatedlabor

pool.IntheCBD,leasingactivitybythetechnologyand

marketing/advertising industries has experienced the

mostgrowth,while leasingactivity by thefinanceand

governmentsectorshasdeclined.

LeasingactivityisexpectedtoremainstrongintheCBD,

asevidencedby12.8millionsq.ft.ofactivetenantsin

themarketwithspacerequirementsof20,000sq.ft.and

above. This compares to 11.9million sq. ft. of active

tenants in Q1 2011. With Class A space tightening,

averageaskingrentsalreadyabove2007levelsandno

significantnewconstructioninthepipeline, thereis in-

creasedpotentialfornewdevelopmenttobreakground

sometimein2013.

The River North submarket boasts the lowest vacancy

rateintheChicagoCBDat6.9%.Thissmall,primarily

ClassBmarkethasgeneratedalotofinterestfromcre-

ativeandtechnologystartupfirms.RiverNorthClassB

averageaskingrentsarealsothelowestintheChicago

CBD,butwilllikelybeunderupwardpressure,asClass

Bvacancycurrentlystandsat3.4%.

San Francisco

TheSanFranciscoDowntownofficemarketrecordedthe

strongestdemandofallU.S.officemarkets,withpositive

absorptionof867,493sq.ft.Vacancydropped120bps

to10%,andrentsincreased12%fromthepriorquarter

to$43.02persq.ft.inQ12012.Growthfromthetech-

nology sector drove demand and technology oriented

business accounted for nearly all of the quarter’s top

transactions,withSalesForce.comexecuting the largest

leaseinover10yearsat400,000sq.ft.Othernotable

transactionswereacombined441,000sq.ft.leasedby

RiverbendTechnologiesandMacy’s.comat680Folsom

street.Leasingactivity totaled2.4millionsq. ft.during

thequarter.

TheRincon/SouthBeachandMultimediaGulchsubmar-

ketshavegeneratedthemosttenantdemand,asexhib-

ited by vacancy rates of 2.9% and 6.4%, respectively.

Thesesubmarketsrepresentsomeofthehighestoverall

averagerental ratesat$46.94persq. ft.and$48.81

persq.ft.,respectively.Inthesetech-heavysubmarkets,

thespreadbetweenClassAandBvacancyratesistight,

asClassBspacewithopenfloorplans,exposedbrick

anda loft feel isoftenpreferred.“B is thenewA”has

becomeafamiliarphrase.

At10%,DowntownSanFranciscovacancyisamongthe

lowest in the country, and has decreased by 450 bps

overthecourseofthepastyear.Largespaceuserswill

finditincreasinglyhardtofindsuitablelocations,ascon-

structionactivityremainslimited.Thereisonlyoneoffice

projectcurrentlyunderwayintheSouthFinancialdistrict,

which is home to the Transbay redevelopment district.

This area will be a hotbed of activity, with significant

newconstructionstartsexpectedinthenext12months

potentiallyadding1.9millionsq.ft.tothemarket.

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Lowest Vacancy Rates

Metropolitan % Downtown % Suburban %

Manhattan 7.6 Manhattan,MidtownSouth 6.0 Cambridge 8.2

Cambridge 8.2 Manhattan,Downtown 7.4 Nashville 9.3

SanFrancisco 10.3 Manhattan,Midtown 8.1 Pittsburgh 10.1

Pittsburgh 10.5 Portland 9.7 SanFrancisco 11.0

Nashville 12.1 SanFrancisco 10.0 SanJose 11.4

Highest Vacancy Rates

Metropolitan % Downtown % Suburban %

PalmBeachCounty 27.3 Tucson 30.5 Detroit 27.5

Detroit 27.1 Dallas/Ft.Worth 28.0 PalmBeachCounty 27.3

Phoenix 26.1 St.Louis 25.9 Phoenix 26.8

LasVegas 24.8 Jacksonville 25.7 Sacramento 25.6

VenturaCounty 24.0 Detroit 25.6 LasVegas 25.4

0.7%

Portland

1.2%

1.1%

Ventura County

1.1%

0.6%

Minneapolis/St. Paul

1.1%

0.7%

Kansas City

0.7%

0.6%

Stamford

0.6%

0.7%

Wilmington

1.1%

0.9% 1.4%

Jacksonville

0.7%

-0.6% -0.7%

Nashville

-3.0%

Las Vegas

-0.9%

Orlando

-0.6%

Cleveland

-0.6%

Denver

-0.7%

Cincinnati-0.6% -1.0%

Indianapolis

-0.6%

San Jose

-0.7%

-1.7%

Walnut Creek

-1.7%

-0.7%

Cambridge

-0.7%

-0.7%

Long Island

-0.7%-0.9%

San Francisco

-1.2%

-0.7%

Seattle

-1.3%

-0.6% -0.7%

Houston

Metropolitan Downtown Suburban

1.7%

Salt Lake City

1.0%

Virginia Northern

-0.8%

Ft. Lauderdale

-1.2%

1.0%

-0.9% -1.5%

Austin

1.0%

0.6%

Washington, DC

0.6%

Phoenix

0.8%

0.5%

Westchester County

0.6%

Hartford

Figure 7: Largest Quarterly Increases and Decreases*

*Percentagepointchange

Source:CBREResearch

Figure 6: U.S. Office Market Snapshot

Source:CBREResearch

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Figure 8: Office VacancyDowntown Suburban Metropolitan

Market Area Size Rank Q1 2012 Q4 2011 Q1 2011 Q1 2012 Q4 2011 Q1 2011 Q1 2012 Q4 2011 Q1 2011

Baltimore 20 19.0 18.8 19.4 15.7 15.5 15.4 16.8 16.6 16.7Boston 7 11.5 11.9 11.2 17.9 17.8 17.4 15.3 15.4 14.9Cambridge 50 N/A N/A N/A 8.2 8.9 11.4 8.2 8.9 11.4Hartford 46 24.9 25.2 26.1 20.3 19.7 19.6 22.2 21.9 22.2LongIsland 31 N/A N/A N/A 14.8 15.5 15.4 14.8 15.5 15.4Manhattan,Downtown 1 7.4 7.5 8.9 N/A N/A N/A 7.6 7.5 8.3Manhattan,Midtown * 8.1 8.0 8.4 N/A N/A N/A N/A N/A N/A

Manhattan,MidtownSouth * 6.0 5.9 7.3 N/A N/A N/A N/A N/A N/AMarylandSuburban ** N/A N/A N/A 15.0 14.9 14.3 N/A N/A N/ANewJersey 8 N/A N/A N/A 16.3 16.5 16.5 16.3 16.5 16.5Philadelphia 12 14.1 14.0 14.0 21.7 22.0 21.6 18.4 18.6 18.4Pittsburgh 16 10.9 11.1 12.5 10.1 10.5 10.8 10.5 10.8 11.7Stamford 26 N/A N/A N/A 20.1 19.5 19.4 20.1 19.5 19.4VirginiaNorthern ** N/A N/A N/A 15.0 14.0 13.7 N/A N/A N/AWashington,DC*** 2 10.2 9.8 10.1 N/A N/A N/A 13.4 12.8 12.7WestchesterCounty 41 N/A N/A N/A 17.5 17.0 16.9 17.5 17.0 16.9Wilmington 52 22.6 21.5 21.3 22.9 22.6 21.6 22.8 22.1 21.5East 9.8 9.7 10.2 16.3 16.1 15.9 13.3 13.2 13.3

Chicago 3 14.9 15.2 16.6 22.6 22.7 23.3 18.4 18.6 19.7Cincinnati 34 23.4 23.0 21.7 23.6 24.3 24.4 23.5 23.8 23.3Cleveland 36 19.2 19.8 23.3 22.8 22.8 23.6 21.1 21.4 23.5Columbus 39 16.9 16.9 17.4 19.7 19.6 20.9 18.7 18.7 19.7Detroit 17 25.6 25.7 27.7 27.5 27.9 28.3 27.1 27.4 28.2Indianapolis 37 17.7 17.6 19.9 20.2 21.2 22.9 19.4 20.0 21.9KansasCity 23 17.0 16.4 16.4 17.9 17.2 16.7 17.6 16.9 16.6Milwaukee 28 18.1 17.9 20.2 15.9 16.3 17.5 16.7 16.9 18.5Minneapolis/St.Paul 18 19.6 19.6 19.8 19.8 18.7 20.8 19.7 19.1 20.3St.Louis 24 25.9 25.7 25.8 14.0 13.7 14.0 17.6 17.3 17.5Midwest 17.8 17.9 19.1 21.1 21.2 21.9 19.8 19.9 20.7

Atlanta 9 23.9 24.0 25.0 23.1 23.0 22.6 23.4 23.3 23.4Austin 32 14.3 13.3 16.2 17.0 18.5 24.1 16.4 17.3 22.3Charlotte 33 14.0 13.7 11.3 24.3 23.8 25.0 20.1 19.7 19.4Dallas/Ft.Worth 4 28.0 27.7 26.8 18.7 19.1 20.1 19.9 20.3 21.0Ft.Lauderdale 44 21.8 20.8 20.2 18.3 19.5 18.8 19.0 19.8 19.1Houston 6 10.7 10.7 11.7 15.5 16.2 17.1 14.4 15.0 15.9Jacksonville 48 25.7 24.3 26.3 20.4 19.7 20.1 22.0 21.1 22.0Miami 29 21.8 22.0 20.1 18.0 17.7 17.5 19.3 19.1 18.4Nashville 40 21.3 21.8 24.5 9.3 10.0 10.5 12.1 12.7 13.7Orlando 35 15.7 16.6 17.6 19.9 19.9 21.4 19.0 19.2 20.6PalmBeachCounty 49 N/A N/A N/A 27.3 27.3 26.0 27.3 27.3 26.0SanAntonio 45 23.7 23.7 25.3 16.1 16.3 16.2 17.5 17.7 17.9Tampa 25 16.7 16.6 17.4 21.0 20.5 22.5 20.3 19.9 21.7South 19.7 19.5 19.9 18.7 19.0 19.9 18.9 19.2 19.9

Albuquerque 53 22.0 22.1 19.9 18.3 17.8 18.2 19.0 18.7 18.5Denver 11 13.0 13.6 14.1 16.0 16.4 16.6 15.3 15.7 16.0Honolulu 54 15.6 16.1 14.7 14.7 15.1 12.7 15.1 15.5 13.6InlandEmpire 47 N/A N/A N/A 22.7 22.8 24.0 22.7 22.8 24.0LasVegas 38 11.9 14.9 15.4 25.4 25.6 24.8 24.8 25.0 24.3LosAngeles 5 18.3 18.5 17.3 16.9 17.4 16.3 17.2 17.6 16.5Oakland 43 13.0 13.0 13.9 14.2 14.8 16.8 13.8 14.1 15.7OrangeCounty 13 N/A N/A N/A 15.0 15.3 15.9 15.0 15.3 15.9Phoenix 15 23.1 22.3 22.1 26.8 26.3 27.5 26.1 25.5 26.4Portland 27 9.7 9.6 9.5 20.3 19.1 20.3 15.2 14.5 15.1Sacramento 22 16.4 16.3 15.8 25.6 25.6 24.4 23.7 23.6 22.6SaltLakeCity 42 17.4 15.7 16.8 14.5 15.0 17.5 15.5 15.3 17.3SanDiego 19 18.6 18.3 19.3 16.2 16.3 17.2 16.6 16.6 17.6SanFrancisco 10 10.0 11.2 14.5 11.0 11.0 12.0 10.3 11.2 13.6SanJose 21 23.5 23.6 23.2 11.4 12.1 17.3 13.2 13.8 18.1Seattle 14 16.3 17.6 18.1 17.9 18.1 19.4 17.2 17.9 18.8Tucson 55 30.5 30.1 20.7 16.7 16.3 17.3 18.3 17.9 17.7VenturaCounty 51 N/A N/A N/A 24.0 22.9 22.9 24.0 22.9 22.9WalnutCreek 30 N/A N/A N/A 16.9 18.6 18.2 16.9 18.6 18.2

West 14.6 15.2 16.1 17.8 18.1 18.5 17.0 17.4 17.9

United States 12.8 12.7 13.2 17.8 17.8 18.3 16.0 16.0 16.5

*IncludedinManhattan,Downtown**IncludedinWashington,DCmetro***Washington,DC,metrofiguresincludeMarylandSuburban,VirginiaNorthernandWashington,DC,DowntownU.S.nationalfiguresprovidedbyCBREEconometricAdvisors(CBREEA),allotherfigurescompiledbyCBREResearch

©2012,CBRE,Inc.


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EdwardJ.Schreyer,SIORExecutiveManagingDirectorBrokerageServices,[email protected]

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CBRE U.S. Office MarketView · 2012-05-25 · Current Qtr. Yr. Vacancy Rate 16.0% Lease Rate $25.31...

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Transcript of CBRE U.S. Office MarketView · 2012-05-25 · Current Qtr. Yr. Vacancy Rate 16.0% Lease Rate $25.31...