Energy and Technology Sectors Lead U.S. Commercial Real Estate Market

Posted on 27 July, 2012 by Jodee Redmond

The second half of 2012 is shaping up well for energy and technology firms on the U.S. west coast. Businesses in this sector continue to post positive numbers, according to the Second Quarter 2012 Office Highlights Report released by Jones Lang LaSalle. Net absorption inventory levels have just entered their ninth quarter of occupancy growth, but the numbers are still below the levels seen in 2011, however.

The report indicated that the technology industry was the clear leader, accounting for a 46 per cent net absorption rate. The energy market had a 23 per cent net absorption.

Leasing activity was up almost 10 per cent from the first quarter of the year, but it was still down 17 per cent year over year. This was the result of tenants negotiating lease extensions in depressed markets in 2010-11. Vacancy declined and dipped slightly to 17.3 per cent, which is the lowest it has been since early 2009. Sublease space was up slightly in the quarter.

Parts of southern California, Arizona and Florida are currently experiencing a strong growth pattern. These areas are putting up numbers which are three times higher than the rest of the country for the second quarter of 2012.

While construction activity was down across most parts of the nation, activity did increase in a few centres. The market in Atlanta, Charlotte, Dallas, Houston, New York, Northern Virginia, San Francisco, Silicon Valley and Washington D.C. saw some growth in the second quarter.

The Jones Lang LaSalle report concluded that the domestic office in the United States will continue its recovery, albeit at a slow but steady pace. In tight markets, commercial tenants will continue to have less leverage with their landlords. Rents will increase, concessions will decrease in the short term. Until the EU formulates a strategy to deal with its members’ debt issues and domestic investors feel more confident, the office market will stay in this mind-set.




2 responses to “Energy and Technology Sectors Lead U.S. Commercial Real Estate Market”

  1. linann says:

    It’s a good post.

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