The office market was one of the commercial sectors hit hardest during the worst days of the recession. The good news, though, is that this sector is now firmly in rebound mode.
That’s the takeaway from the latest office research from DTZ.
Here are the key numbers: U.S. businesses expanded into a greater amount of office space in 2014 than they had in eight years. And even better? Office rents increased last year in 70 percent of the country’s major markets.
According to DTZ, the U.S. office sector absorbed 21.4 million square feet of office space in the fourth quarter of last year. That figure is an increase of 47 percent when compared to the same period one year earlier.
For all of 2014, the U.S. office sector absorbed 70.2 million square feet. That is the highest this figure has been since 2006. The U.S. office vacancy rate fell 30 basis points in the fourth quarter of 2014 to hit 14.5 percent. DTZ tracks 80 metropolitan areas across the country. Vacancies fell in the fourth quarter in 61 of these.
Kevin Thorpe, chief economist for the Americas for DTZ, says that the office sector’s recovery has been a long time coming.
“The office sector has been absorbing space at nearly twice its historical average,” Thorpe said in a written statement. “Robust job creation has taken over as the dominant force. Fundamentals still vary greatly by location, but the latest demand metrics can no longer be characterized as subpar. This is robust.”
DTZ found that in the fourth quarter of last year, the average asking rents for U.S. office space rose 2 percent when compared to the same quarter in 2013. DTZ found, too, that 105 million square feet of new office space was under construction at the end of 2014. That is up 76 percent when compared to 2013.