The office sector continues to struggle more than 19 months into the COVID-19 pandemic. And according to the latest research from CommercialEdge, those struggles aren’t over yet.
In its September National Office Report, CommercialEdge said that the average office asking rent in the United States’ 50 largest office markets stood at $38.72 a square foot in August. That figure is a stagnant one. It represents an increase of just 1.2 percent from August of last year and a jump of just 10 cents from July.
CommercialEdge reported that the average office vacancy rate in August was 15.4 percent. That’s 210 basis points higher than the same time in 2020. In somewhat good news, this vacancy rate was down 10 basis points from where it stood in July.
Despite its struggles, the office market has still attracted buyers. CommercialEdge reported that high-quality office assets are still appealing to investors, with office transactions totaling $45 billion in 2021 throughout the end of August.
Office properties that sold in the 50 biggest U.S. markets traded for an average of $287 a square foot.
The pandemic might have slowed office construction, but it hasn’t stopped it completely. CommercialEdge says that as of August, there was a total of 156.7 million square feet of new office stock under construction.
This amount of new construction is lower than usual, as just 38.2 million square feet of new office product was delivered during the first eight months of 2021. More than 90 percent of the new office space is in the Class-A or Class-A-plus categories.