Despite the recession easing job creation in the United States is not keeping pace with available office space.
The office market is growing at what is being described as a “glacial” pace. New York-based researcher Reis has released figures indicating that the national office vacancy rate is 17.1 per cent.
In 2011 and 2012, businesses absorbed an average of 4.3 million sq ft of office space each quarter.
The average rent increased by 1.8 per cent in 2012 over the previous year. The best markets for commercial property were San Francisco (6.6 per cent), San Jose, CA (3.1 per cent), New York (3.1 per cent), Houston (3.2 per cent) and Dallas (2.5 per cent).
The technology and energy sectors have been fueling demand in these markets over the past several months, which is driving up rents. Hiring in media and financial services industries, two of the largest traditional drivers of office leasing across markets nationwide, has been flat since February of 2010, according to Kenneth McCarthy, chief economist with brokerage firm Cushman & Wakefield.
Professional and business services have produced some job growth with 1.5 million positions added over the past three years, according to McCarthy. Temporary workers account for a good number of these jobs, but that sector has started to flatten as well. This may be a sign of a shift in the market and that employers are starting to hire more permanent workers.
McCarthy said, “In financial services, there’s still uncertainty about Europe and there’s still uncertainty about what the regulatory environment (in the U.S.) is going to be like. I would expect the media sector to pick up as technology continues to advance, but then you’ve got the print media as a piece of that, and it’s struggling.”
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