Tenants continue to flock to top-tier office properties while new construction in this sector remains sluggish. And vacancy rates? They’re still barely falling.
That’s the takeaway from CommercialCafe’s September national office report, which you can read in full here.
According to CommercialCafe, the national office vacancy rate in the United States hit 18.7% in August. That is a decrease of 80 basis points from the same month a year ago. The national office listing rate averaged $32.63 a square foot in August, a drop of 0.4% from a year ago.
Don’t expect new product to boost this sector’s vacancy rate. CommercialCafe reported that a modest 40 million square feet of office space was under construction in the United States as of the start of September.
There are some bright spots in the national office market, though. CommercialCafe reported that tenants continue to lease space in higher-quality buildings with top-tier amenities. Many companies are choosing this type of space as they try to bring their workers back into the office on a more frequent basis.
How are Midwest markets performing? CommercialCafe reported that the average office vacancy rate in the Minneapolis-St. Paul market stood at 17.6% in August, below the national average. Nashville’s office vacancy rate also came in under the national average at 18%.
The office vacancy rate in Chicago stood at an average of 19.1% in August, while it reached 23.2% in Detroit.
And in Texas? Austin’s vacancy rate of 26.5% in August ranked among the highest in CommercialCafe’s study. That vacancy rate was 22.4% in Dallas and 20.2% in Houston.
In better news for Texas, Dallas saw its average sales price of office space jump to $240 a square foot in August of this year from $107 a square foot during the same month a year ago. CommercialCafe points to the sale of The Link at Uptown office property as an example of a big Dallas office deal that closed this year. This property nabbed a sales price of $218 million, more proof that investors are still interested in high-quality office space.
