Suburban Office Market Summary
Quarter in review
The overall vacancy rate among the suburban office submarkets continued its climb for the 7th consecutive quarter, reaching 23.5 percent at the end of June, up slightly from 23.4 percent last quarter and up more than a full percentage point from the 22.4 percent recorded a year ago.
Suburban office vacancy rates are currently the highest they have been in well over a decade. Demand, as measured by net absorption, remains weak throughout the market. Cumulative net absorption for the first half of the year totaled negative 394,423 square-feet, despite increased leasing activity. While this is an ongoing negative trend, it is an improvement from last year, when net absorption for the first half of the year totaled negative 1.3 million square-feet.
Although vacancy rates continue to rise and demand remains limited, there have been positive signs in the market. The investment sales market, nonexistent during 2009, has picked up during the first half of the year. Similarly, increasingly confident large companies have started hiring again and are actively looking for additional space. These companies are taking their time, however, as options are plentiful, rental rates are low and leasing incentives remain attractive for tenants. Read more