despite slowing growth, further upside remains for u.s ... · the u.s. office vacancy rate fell...
TRANSCRIPT
Despite Slowing Growth, Further Upside Remains for U.S. Office Market Stephen Newbold, National Director of Office Research | USA
U.S. Research Report
OFFICE MARKET OUTLOOKQ4 2016
As we reflect on Q4 2016 activity and our outlook for 2017, the U.S. office market seems to be reaching equilibrium. While rents increased modestly in 2016, rent growth has slowed considerably and vacancies appear to be bottoming out. Net absorption also shifted down in 2016 as consolidation, downsizing and renewals became more prevalent.
However, investors continue to have a strong appetite for office assets. Some investors are also becoming less risk-averse as they chase higher yields, with a particular focus on suburban assets. In 2017, we expect that economic growth will provide a boost to the U.S. office market, but overall, the market will move forward at a slower pace.
Key Observations
> Absorption Drops but GDP Growth May Bolster Demand: Net absorption fell in 2016 as occupiers sought to limit costs. New leasing has been restricted by an increase in downsizing, consolidation and renewals as well as backfilling shadow space. Still, increased GDP growth in 2017 could help offset this trend and early 2017 leasing volume in Manhattan bodes well. Financial services and technology companies should continue to lead leasing activity. If enacted by the new administration, deregulation and business tax reductions may lead to demand gains, though it will take some time to filter through the market.
> Vacancy Troughs as Rent Growth Slows: At the peak of the prior cycle in 2007, the national office vacancy rate fell to a low of 12.2%. In 2016, the vacancy rate held at virtually the same level. While Class A rents in most markets are holding firm or growing at a reduced pace, tenant incentive packages are increasing in some locations where vacant new supply is being added or occupiers are moving out.
> Most Markets Are Still Improving: Almost 75% of the metro office markets tracked saw an increase in asking rents and a fall in vacancy rates in 2016. Just over 60% experienced positive net absorption. This national picture shows even stronger office market performance than identified in our Q4 2016 Top Office Metros Snapshot.
Summary Statistics | Q4 2016 U.S. Office Market
Vacancy Rate 12.3% Change From Q3 2016 (Basis Points) -10
Absorption (MSF)
% of Markets with Positive Absorption
12.9
61%
New Supply (MSF) 12.6
Under Construction (MSF) 109.9
ASKING RENTS PER SQUARE FOOT PER YEAR
Downtown Class A $46.90 Change From Q3 2016 Change From Q4 2015
+0.7%+4.1%
Suburban Class A $29.13 Change From Q3 2016 Change From Q4 2015
+0.4%+2.7%
Market IndicatorsRelative to Prior Period
Q4 2016
Q4 2017*
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE** *Projected **Rental rates for current quarter are for CBD; rent forecast is for metrowide rents.
Overall, the economy ended 2016 on a relative high note and is on positive footing for 2017 and beyond. The average forecast calculated by Consensus Economics’ Consensus Forecasts® calls for real GDP growth of 2.3% in each of the next two years (up from 1.6% in 2016), along with modest increases in inflation and interest rates.
Job gains rose to 227,000 jobs in January 2017, the largest gain in four months after averaging only 165,000 per month in Q4 2016 — all the more impressive for an economy near full employment. The economy has now added jobs for a record 75 consecutive months.
The office sector stands to gain from economic policies anticipated in the coming years. However, no new programs have been proposed yet, much less adopted, so any forecasts of impacts must be viewed as at least somewhat speculative. The planned stimulus package of infrastructure spending and tax cuts would likely increase office leasing as a result of increased GDP and employment — though the impacts are unlikely to be felt until late 2017. The expected regulatory rollbacks in the financial and pharmaceutical sectors — both major office space users — could boost leasing as well.
Absorption Falls and Vacancies Level Off
National office absorption slowed in 2016 to 57.9 million square feet, a 40% reduction from the 2015 total. Suburban markets accounted for more than 80% of absorption in the second half of 2016. Ten suburban markets saw more than half a million square feet of absorption in Q4 2016, led by Los Angeles, Seattle and Dallas with totals exceeding 1 million square feet each.
Markets like Dallas exemplify the trend of the shifting core, as the Far North Dallas area leads in terms of demand and construction activity. While removed from downtown, it offers a new urban core as opposed to being truly suburban in nature. On a smaller scale, downtown Bellevue has become an established competitor to downtown Seattle.
But tenants are not turning their backs on downtown locations. Rather, limited large-block availability in CBDs is restricting leasing. Access to a labor pool of skilled young professionals, who often hold a strong preference for urban living, is a key consideration for some firms. Notable examples of large-scale moves to downtown locations in 2016 include Warner Music in Los Angeles and Kraft Heinz and McDonald’s in Chicago. Other CBD moves in the works include HomeAdvisor in Denver and Expedia in Seattle.
A rising number of occupiers are choosing to renew their existing leases rather than relocate, signaling a cautious mood. Four of the top five lease transactions in Manhattan in Q4 2016 were renewals. Renewals also led recent leasing activity in markets from Atlanta to Chicago to Miami. Cost control and more efficient space usage continue to factor into the decision-making process. Where moves are occurring, more tenants are reducing their footprints and consolidating into single buildings.
2 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International
U.S. Job Growth Trends | 2-Month Moving Average
Source: Bureau of Labor Statistics
> Market Cores Continue to Shift: Suburban markets account for most current absorption, driven by large build-to-suit campuses and new urban environments that compete with traditional downtown locations. Office tenants are not abandoning downtowns but the desire to be located near highly-qualified, young professionals who prefer urban living must be balanced against the limited availability of large blocks of space.
> Pre-Leased Space Leads Development Activity: Construction activity remains elevated but the majority of space under construction is pre-committed. The delivery pipeline is also heavily front-loaded, so deliveries will likely ease by 2018. Speculative development is occurring in select pockets of downtown/urban fringe markets where there is a perceived shortage of modern, prime assets, and this may put pressure on rents. If leasing these properties proves to be protracted, expect an uptick in downtown vacancy. In addition, as market demand moderates and construction costs rise, expect a slowdown in projects breaking ground.
> Investors Chase Returns as Yield Gaps Narrow: Investment in suburban assets in 2016 outpaced investment in downtown markets, accounting for 59% of the total sales volume. As yield gaps tighten due to rising inflation and increased finance costs, investors are selectively chasing higher yields. Additionally, several large suburban campuses were brought to market, boosting the suburban total. Nonetheless, institutional and cross-border investors are still attracted to trophy central business district (CBD) assets with high-credit, long-term income streams. Low domestic bond yields continue to drive cross-border purchases.
Economic Growth Signals Potential Upside for the Office Sector
The U.S. economy continues to move forward. Though GDP growth slowed to 1.6% overall in 2016, growth accelerated in the second half of the year to 2.7%, auguring further growth for the year ahead. Job growth is still robust, with 661,000 new office-using jobs added in 2016 — two-thirds of which were created in the second half of the year.
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Office-Using Employment Non-Farm Employment
Jobs
The U.S. office vacancy rate fell slightly in Q4 2016 to 12.3%, but appears to be plateauing. The current vacancy rate is almost on par with that seen at the peak of the last cycle in Q3 2007, when the rate bottomed at 12.2%.
Less than a third of U.S. markets have a vacancy rate below 10%. A significant number of these markets — both primary and secondary — are those in which tech tenants are a major demand driver. Vacancy in downtown markets was relatively static over the past year with a 10-basis-point increase to 11.4% in Q4 2016. The suburban vacancy rate fell from 13.4% to 12.8% over the same time period.
Speculative or partially unleased new construction in some downtown markets — most notably San Francisco, Seattle and Washington, D.C. — could also strain occupancy levels in 2017. Nine speculative projects across these three markets — totaling 2.8 million square feet — are set to deliver this year and almost 60% of this space is available. For example, Salesforce Tower in downtown San Francisco is scheduled to be completed in 2017 and while Salesforce pre-leased half of the space, 555,000 square feet or 40% of the total is uncommitted.
3 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International
U.S. Office Market | Q4 2014 - Q4 2016
Source: Colliers International
YOY Change in Vacancy-3.0% 3.0%
8.5%-0.6%
8.6%-0.1%
11.1%-0.7%15.1%
-0.1%
7.6%-1.5%
11.2%0.5%11.2%-0.8%
17.7%-1.0%8.3%
0.9%
14.2%-1.2%
11.3%-1.5%
15.8%-1.4%
11.4%-0.3%
10.9%-0.1%
8.5%0.3%
10.1%-0.9%
15.5%-0.4%
8.8%-0.4%
17.5%2.1% 12.8%
-1.4%
10.9%-1.2%
9.4%-2.7%
12.3%-0.2%
13.1%-0.7%
12.9%-1.7%
9.4%-0.7%
11.7%1.7%
14.8%-0.5%
22.7%-1.5%
15.1%-0.8%
15.4%-0.6%
14.1%0.3%
13.7%-0.4%
4.6%-0.9%
14.1%-1.4%
12.5%-2.6%
16.5%-1.2%
8.6%-0.3%
7.8%-0.7%
16.2%0.5%
8.5%0.7%
6.5%-1.3%
11.0%-1.2%
15.3%0.0%
8.6%-1.2%
8.2%-0.4%
13.2%-0.7%
10.8%-0.6%
12.0%0.6%
9.4%-0.8%
11.9%0.3%
11.1%-2.6%
13.9%0.9%
*Map based in Longitude (generated) and Latitude (generated). Color shows YOY Change in Vacancy Rate. Details are shown for Metro Area (geo). The data is �ltered on Year Qtr, which keeps Q4 2016.
YOY Change in Metro Vacancy - Q4 2016
Year-Over-Year Change in Metro Vacancy | Q4 2016
Top U.S. Office Leases | Q4 2016TENANT ADDRESS MARKET SF TENANT INDUSTRY
Akamai Technologies 145 Broadway Boston 486,048 Technology
Pfizer, Inc. 875 Chesterfield Pkwy W. St. Louis 460,000 Pharmaceutical
Charles Schwab & Co., Inc.* 211 Main Street San
Francisco 394,704 Financial Services
Amazon.com, Inc. Midtown 21 Seattle 381,491 Technology
Major League Baseball
1271 Ave. of the Americas New York 380,983 Trade
Assocation
*Renewal Sources: CoStar, Colliers International
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Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016
Absorption (MSF) New Supply (MSF) Vacancy Rate (%)
MSF
Vaca
ncy
(%)
Rents Rose in 2016 but Growth is Set to Slow
Almost three-quarters of the metro markets that Colliers tracks saw an increase in asking rents in 2016. Asking rents for all classes of office space across the U.S. grew by 5.4% in 2016 to an average of $28.81 per square foot.
Average Class A asking rents closed out 2016 at $46.90 per square foot in downtown areas and $29.05 per square foot in the suburbs. Both figures represent annual gains, but the pace of rent appreciation has slowed. Class A downtown asking rents increased by 4.1% as of Q4 2016 compared to 2.7% in suburban markets — down from 12-month growth rates in Q3 2016 of 7.6% and 3.3%, respectively. In order to achieve pro-forma rents, landlords and developers in some markets are resorting to significant incentives. Rent-free periods of up to 24 months and tenant incentive packages of $100 per square foot are being offered to achieve a 15-year term in markets where there is an excess of new supply. In Boston, as firms move to new space in Seaport, vacancy in the premium upper floors of the Financial District’s Class A towers has risen sharply with an associated impact on achievable rents.
In the suburban markets, the highest rents are concentrated in the west with the San Francisco Bay Area, San Diego, Seattle/Puget Sound and Greater Los Angeles occupying the top four slots. Six suburban markets achieved rent growth of 6% or higher over the past 12 months, led by Portland at 8.8%. Portland and Oakland are examples of markets that are profiting from lower cost bases than their expensive neighbors.
4 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International
YOY Change in Rent-10.0% 10.0%
$43.493.2%
$32.703.2%
$33.841.4%
$67.048.2%
$20.48-2.5%
$41.401.4% $35.76
6.8%
$23.29-3.9%
$17.931.5%
$24.000.0%
$33.529.5%
$35.20-1.0%
$26.004.8%
$17.463.2%$17.46
3.2%
$21.054.9%
$23.784.3%
$27.215.9%
$50.6513.2%
$19.3014.8%
$19.472.8%
$44.64-3.2%
$27.847.2%
$23.4511.2%
$41.245.9%
$21.272.9%$25.34
-4.1%
$21.70 0.0%
$36.514.0%
$28.964.1%
$23.061.5%
$57.822.4%
$25.577.4%
$30.573.9%
$22.593.0%
$58.073.5%$21.63
1.9%
$74.043.2%
$21.580.0% $23.49
16.4%
$42.462.5%
$18.960.9%$18.271.8%
$20.640.3% $27.92
10.2%
$30.272.2%
$29.633.1%
$22.634.6%
$27.188.7%
$28.168.1%
$21.844.3%
$23.64-2.9%
*Map based in Longitude (generated) and Latitude (generated). Color shows YOY Change in Rent. Details are shown for Metro Area (geo). The data is �ltered on Year Qtr, Submarket Type and Class. The Year Qtr �lter keeps Q4 2016. The Submarket Type �lter keeps CBD. The Class �lter keeps A.
YOY Change in CBS Class A Rent - Q4 2016
Year-Over-Year Change in CBD Class A Rent | Q4 2016
Construction Volume Increasing but Dominated by Pre-Leasing
The volume of office space under construction has risen to 110 million square feet, equivalent to 1.8% of the total U.S. office inventory. Of this, 42.5 million square feet is underway in downtown markets and 67.5 million square feet is in the suburbs.
Four markets dominate the construction picture, accounting for almost half of the current activity: Dallas, Manhattan, the San Francisco Bay Area and Washington, D.C. The Bay Area leads with almost 16 million square feet underway, with the greatest volume in Silicon Valley. Dallas follows with 11 million square feet, while Manhattan and Washington, D.C. (including Northern Virginia and Maryland) are just below the 10-million-square-feet mark.
Future deliveries are heavily front-loaded, with 68% of space underway set to deliver in 2017. In total, 62% of space underway is pre-leased, but more developers are now building speculative projects in select primary locations. For example, the nearly 1-million-square-foot 801 Broadway development in Los Angeles is 100% available and due to deliver in Q3 2017. By contrast, four office towers totaling 5.9 million square feet are being built in downtown Chicago and 70% is pre-leased — while there is no activity in the suburbs.
Investor Demand Stays Strong
In 2016, national office transaction volume reached $140.5 billion, down 7% from the 2015 total but still the fourth-highest annual total in the past 15 years. Office capitalization rates compressed by an average of 20 basis points in 2016 to 6.6%. In 2016, portfolio transaction volume fell by 30% year-over-year to $28.9 billion, allowing single-asset sales volume to rise to $112.9 billion.
2016 deal volume was flat year-over-year in the suburbs while falling by 13% in CBD markets. Transaction activity in the suburbs reached $83.3 billion in 2016, compared with $58.3 billion in CBD markets. Investors willing to take on some risk are being enticed by the 130-basis-point yield gap between suburban and CBD assets.
The six major markets continue to dominate investment activity, with Manhattan leading the way with $22.8 billion of office purchases in 2016, followed by Los Angeles at $11.3 billion — reflecting the greatest increase in deal volume year-over-year. Going-in cap rates for trophy assets in the major markets were in the 4%–4.5% range and sometimes lower.
While institutional and private investors remain the most active buyers, accounting for 31% and 36% of 2016 office sales volume respectively, acquisitions by cross-border investors continue to rise. Cross-border investment totaled $29.8 billion in 2016 with EMEA-based buyers representing half of that sum and 40% from Asia Pacific sources. The three most active countries in 2016 in terms of U.S. office investment were China, Germany and Canada.
5 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International
Cross-Border Investment in the U.S. | Q4 2016
COUNTRY # OF PROPERTIES TOTAL VOLUME*
China 4 1,450.0 South Korea 4 1,118.2
Canada 19 959.7
Japan 5 864.0
Israel 3 618.5
Germany 4 548.0
Spain 1 533.3
Switzerland 4 416.9
Hong Kong 3 294.3
United Kingdom 4 280.8
Other 7 546.1
Total 58 7,629.7
* Volume in MillionsSource: Real Capital Analytics
Top U.S. Office Sales | Q4 2016
ADDRESS MARKET SF PRICE BUYER
1221 Avenue of the Americas* New York 2,652,712 $1,030,000,000 China Investment
Corp.State Farm
Operational CenterDallas-Ft.
Worth 2,262,902 $822,400,000 Transwestern Investment Group
One Kendall Square Boston 676,440 $725,000,000 Alexandra Real
Estate EquitiesSoutheast
Financial Center Miami 1,142,000 $533,300,000 Ponte Gadea
One Front Street San Francisco 651,732 $521,000,000 Paramount Group
* Partial Interest SaleSource: Real Capital Analytics
Quarterly Under Construction Totals
Source: Colliers International
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6 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International
Supplemental DataLandlord and Tenant Conditions (Largest 20 Markets)
Source: Colliers Q4 2016 office survey. Tenant-landlord assessment reflects conditions as of Q4 2016.
Landlord and Tenant Conditions(Largest 20 Markets)
$5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 $60.00 $65.00 $70.00 $75.00Q4 2016 Average CBD Rent, All Classes ($/SF/Year)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
Q4 2
016
CBD
Vaca
ncy
Rate
Median
Median
L
L
L
L
LL
L
=
=
T
==TL
L
=
L
Los Angeles
Denver
Silicon Valley
Sacramento
Portland
Phoenix
East Bay
Orlando
Dallas
Washington, D.C.
NYC Northern Suburbs
Manhattan
Boston
Philadelphia
Cleveland
Detroit Chicago
SubregionMidwestNortheastSouthWest
Leasing Market TrendIn Favor of Landlord
Equal FootingIn Favor of Tenant
L=T
7 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International
Source: Colliers Q4 2016 office survey. Absorption forecasts reflect a 12-month outlook.
Supplemental Data (continued)Absorption Forecast (Largest 20 Markets)Expected Absorption Over Next 12 Months
Absorption Forecast(Largest 20 Markets)Expected Absorption over Next 12 Months
-0.8% -0.6% -0.4% -0.2% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0% 2.2% 2.4% 2.6%YTD Absorption as % of Inventory (as of Q4 2016)
-5.5%
-5.0%
-4.5%
-4.0%
-3.5%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
YoY
Chan
ge in
Vac
ancy
Rat
e
Median
Median
Silicon Valley
Sacramento
Portland
Phoenix
Los Angeles
East Bay
Denver
Orlando
DallasWashington, D.C.
Philadelphia
NYC Northern Suburbs
ManhattanBoston
ClevelandChicago
Absorption ForecastPositiveClose to Zero
SubregionMidwestNortheastSouthWest
8 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International
United States - Downtown - All Classes
MARKET INVENTORY (SF) DEC 31, 2016
NEW SUPPLY Q4 2016 (SF)
UNDER CONSTRUCTION (SF)
VACANCY RATE SEP 30, 2016
VACANCY RATE DEC 31, 2016
ABSORPTION Q4 2016 (SF)
YTD ABSORPTION (SF) 2016
USA 1,948,381,626 4,745,974 42,539,747 11.3 % 11.4 % 1,241,664 9,386,805
NORTHEAST 885,574,531 1,392,635 18,048,526 10.3 % 10.6 % -1,217,100 -15,836
Baltimore, MD 46,007,857 647,336 112,500 10.2 % 11.1 % -125,952 311,166
Boston, MA 66,745,452 35,000 1,459,678 11.1 % 11.3 % 137,467 -267,410
Hartford, CT 10,723,579 0 0 13.7 % 13.6 % 13,421 -216,637
New York City Metro 523,132,638 0 9,917,809 6.7 % 6.9 % -1,626,166 -3,845,292
> Manhattan 506,126,142 9,917,809 6.4 % 6.4 % -1,773,115 -3,792,054
• Downtown 104,384,942 2,861,402 8.0 % 8.2 % -662,347 580,677
• Midtown 236,122,551 2,668,790 6.8 % 6.6 % -213,386 -1,871,124
• Midtown South 165,618,649 4,387,617 4.8 % 4.9 % -897,382 -2,501,607
> NYC Northern Suburbs 17,006,496 0 0 15.9 % 20.4 % 146,949 -53,238
• Fairfield County, CT 10,477,342 0 0 16.8 % 23.0 % 244,249 185,062
• Westchester County, NY 6,529,154 0 0 14.5 % 16.4 % -97,300 -238,300
Philadelphia, PA 42,554,692 0 1,546,054 9.6 % 9.6 % -22,118 199,029
Pittsburgh, PA 52,249,580 50,000 104,563 8.2 % 8.5 % -129,021 292,990
Washington, D.C. 144,160,733 660,299 4,907,922 11.2 % 10.9 % 535,269 -89,682
SOUTH 362,308,544 1,093,157 8,332,733 12.7 % 12.5 % 1,700,634 2,971,775
Atlanta, GA 50,768,074 91,873 1,469,000 14.7 % 14.2 % 307,119 685,101
Austin, TX 12,476,301 0 1,060,692 5.8 % 5.5 % 45,324 203,598
Birmingham, AL 5,056,317 0 0 14.2 % 13.8 % 392 73,330
Charleston, SC 2,422,148 0 87,500 4.8 % 6.6 % -43,055 -5,207
Charlotte, NC 21,353,763 0 1,213,461 6.2 % 6.8 % -126,005 13,753
Columbia, SC 4,854,281 0 0 10.9 % 11.0 % 23,532 127,727
Dallas-Ft. Worth, TX 42,919,027 92,834 634,126 20.6 % 20.8 % -1,694 -787,727
> Dallas 32,299,076 92,834 353,637 23.6 % 23.8 % 9,487 -611,087
> Fort Worth 10,619,951 0 280,489 11.6 % 11.7 % -11,181 -176,640
Greenville, SC 3,707,131 125,000 40,000 10.2 % 12.9 % 35,842 198,029
Houston, TX 42,990,104 0 1,056,658 16.9 % 16.8 % 29,984 -206,060
Huntsville, AL 3,856,002 8.4 % 7.4 % 19,122 52,333
Jacksonville, FL 16,093,619 0 0 11.3 % 10.6 % 67,029 202,218
Memphis, TN 5,238,652 0 0 13.5 % 13.1 % 24,096 -5,335
Nashville, TN 13,194,995 772,000 1,245,000 8.3 % 7.0 % 949,361 1,053,344
Norfolk, VA 4,399,043 0 0 13.1 % 9.7 % 14,780 33,943
Orlando, FL 12,907,102 0 15,000 10.2 % 8.8 % 102,853 211,840
Raleigh-Durham, NC 12,326,469 0 701,000 4.6 % 4.4 % 17,402 65,035
Richmond, VA 16,336,049 0 0 9.1 % 8.8 % 39,116 2,654
Savannah, GA 803,516 0 0 12.1 % 14.5 % -19,135 31,135
South Florida 80,355,288 11,450 810,296 11.6 % 11.5 % 197,629 966,713
> Fort Lauderdale 27,186,809 11,450 238,456 10.9 % 10.7 % 86,786 316,385
> Miami 31,459,114 0 547,271 12.4 % 12.6 % 100,333 305,954
> Palm Beach 21,709,365 0 24,569 11.4 % 11.2 % 10,510 344,374
Tampa Bay, FL 10,250,663 0 0 12.1 % 13.5 % 16,942 55,351
9 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International9
United States - Downtown - All Classes
MARKET INVENTORY (SF) DEC 31, 2016
NEW SUPPLY Q4 2016 (SF)
UNDER CONSTRUCTION (SF)
VACANCY RATE SEP 30, 2016
VACANCY RATE DEC 31, 2016
ABSORPTION Q4 2016 (SF)
YTD ABSORPTION (SF) 2016
MIDWEST 376,674,136 1,351,702 4,293,060 12.9 % 12.4 % -240,039 3,089,955
Chicago, IL 161,186,689 1,081,702 3,557,719 12.2 % 11.3 % 29,315 549,011
Cincinnati, OH 18,214,529 65,000 12.9 % 12.7 % -3,211 369,780
Cleveland, OH 19,985,163 17.9 % 17.4 % 109,011 -23,667
Columbus, OH 19,807,117 107,000 8.1 % 7.5 % 158,619 171,069
Dayton, OH 5,180,211 27.3 % 27.4 % -6,776 61,123
Detroit, MI 24,926,805 0 0 12.2 % 12.4 % -203,641 298,757
Indianapolis, IN 11,740,069 0 25,361 18.1 % 18.1 % 32,470 127,552
Kansas City, MO 33,724,626 0 166,650 9.8 % 9.2 % 192,330 397,044
Milwaukee, WI 16,804,175 0 0 15.4 % 12.4 % 3,792 279,278
Minneapolis-St. Paul 47,332,046 210,000 272,000 11.9 % 13.7 % -532,152 906,168
> Minneapolis CBD 36,336,707 210,000 272,000 13.1 % 15.4 % -541,498 646,247
> St. Paul CBD 10,995,339 7.9 % 7.8 % 9,346 259,921
Omaha, NE 6,193,063 10.1 % 11.1 % -60,616 -278,510
St. Louis, MO 11,579,643 60,000 99,330 20.9 % 20.2 % 40,820 232,350
WEST 323,824,415 908,480 11,865,428 10.9 % 11.0 % 998,169 3,340,911
Downtown Bakersfield, CA 3,432,070 0 0 7.1 % 8.0 % -34,111 -140,644
Denver, CO 35,332,073 311,015 2,286,078 11.9 % 12.8 % -15,400 -301,377
Fresno, CA 3,301,851 0 0 16.0 % 15.1 % 31,418 -54,046
Downtown Los Angeles, CA 32,235,300 0 1,993,600 18.2 % 18.2 % -16,000 273,100
Honolulu, HI 7,153,292 13.8 % 15.8 % -83,598 -11,553
Las Vegas, NV 5,019,885 26,100 0 12.8 % 12.8 % 17,055 153,541
Phoenix, AZ 21,142,949 122,220 0 17.7 % 17.9 % 98,801 226,675
Portland, OR 25,457,366 116,548 337,272 9.9 % 10.5 % -31,334 165,927
Reno-Sparks, NV 4,038,322 0 0 10.8 % 10.0 % 23,549 96,400
Sacramento, CA 12,251,491 0 0 13.4 % 12.8 % 92,096 212,483
San Diego, CA 10,357,116 0 0 16.2 % 14.7 % 122,560 363,389
San Francisco Bay Area, CA 129,017,050 0 5,361,182 7.2 % 6.8 % 578,076 1,713,772
> East Bay 29,544,319 0 0 7.5 % 6.6 % 274,841 141,593
> San Francisco 91,080,359 0 5,361,182 6.9 % 6.6 % 320,015 1,513,343
> Silicon Valley 8,392,372 0 9.5 % 9.7 % -16,780 58,836
Seattle, WA 26,835,368 332,597 1,581,296 9.8 % 11.2 % 264,841 674,340
Stockton, CA 8,250,282 0 306,000 11.0 % 11.2 % -49,784 -31,096
(continued)
10 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International
United States - Downtown - Class A
MARKET INVENTORY (SF) DEC 31, 2016
AVG ANNUAL QUOTED RENT (USD/SF)
VACANCY RATE SEP 30, 2016
VACANCY RATE DEC 31, 2016
ABSORPTION (SF) Q4 2016
QUARTERLY CHANGE IN RENT
ANNUAL CHANGE IN RENT
USA 1,088,429,063 $46.90 11.6 % 11.9 % 2,226,161 0.77 % 4.11 %
NORTHEAST 551,355,684 $63.66 11.1 % 11.6 % -166,622 -0.67 % 2.80 %
Baltimore, MD 16,709,726 $25.57 11.3 % 14.0 % 129,965 3.40 % 7.36 %
Boston, MA 46,644,483 $58.07 11.7 % 12.0 % -44,817 -2.07 % 3.50 %
Hartford, CT 7,415,680 $22.59 15.9 % 15.3 % 40,644 0.04 % 3.01 %
New York, NY 336,265,994 $74.04 7.5 % 7.6 % -601,048 -0.50 % 3.22 %
> Manhattan 323,242,521 $78.19 7.1 % 7.0 % -856,146 -0.6% 3.6%
• Downtown 79,469,698 $60.25 9.0 % 9.1 % -357,997 0.6% 2.6%
• Midtown 203,429,082 $85.09 7.0 % 6.7 % -107,909 -1.2% 2.1%
• Midtown South 40,343,741 $81.72 3.5 % 3.9 % -390,240 3.1% 9.3%
> NYC Northern Suburbs 13,023,473 $43.18 16.8 % 21.8 % 255,098 -0.22 % -0.07 %
• Fairfield County, CT 9,069,460 $46.13 16.6 % 23.7 % 243,425 0.39 % 0.02 %
• Westchester County, NY 3,954,013 $34.75 17.1 % 17.6 % 11,673 -0.32 % 6.20 %
Philadelphia, PA 30,312,636 $30.57 9.1 % 9.3 % -66,091 -0.06 % 3.88 %
Pittsburgh, PA 22,917,510 $28.16 8.2 % 9.2 % -182,638 3.84 % 8.06 %
Washington, D.C. 91,089,655 $57.82 11.7 % 11.7 % 557,363 0.24 % 2.37 %
SOUTH 194,726,557 $31.91 13.8 % 13.4 % 1,498,079 3.12 % 6.63 %
Atlanta, GA 31,212,709 $27.92 15.0 % 14.2 % 305,619 3.61 % 10.16 %
Austin, TX 7,594,405 $50.65 6.6 % 5.8 % 62,170 -0.04 % 13.18 %
Birmingham, AL 3,939,806 $20.64 9.7 % 9.0 % 7,746 11.09 % 0.29 %
Charleston, SC 950,039 $36.51 5.9 % 8.5 % -25,295 1.57 % 3.97 %
Charlotte, NC 15,426,598 $30.27 6.5 % 7.4 % -143,310 -0.66 % 2.23 %
Columbia, SC 2,324,922 $23.45 12.0 % 10.9 % 25,835 -2.11 % 11.20 %
Dallas-Ft. Worth, TX 29,052,177 $27.21 23.9 % 24.3 % -36,938 1.18 % 5.87 %
> Dallas 23,067,566 $26.97 26.4 % 26.8 % -32,060 1.24 % 6.35 %
> Fort Worth 5,984,611 $29.21 14.5 % 14.6 % -4,878 0.31 % 1.39 %
Greenville, SC 2,435,167 $27.18 10.0 % 12.8 % 45,580 0.98 % 8.73 %
Houston, TX 31,571,839 $44.64 13.5 % 13.4 % 31,374 -1.89 % -3.23 %
Huntsville, AL 871,864 $19.30 6.9 % 6.7 % 4,558 0.57 % -14.75 %
Jacksonville, FL 7,524,530 $21.27 11.4 % 10.5 % 32,675 -0.30 % 2.90 %
Memphis, TN 1,971,211 $18.27 20.0 % 18.5 % 29,402 -1.08 % 1.84 %
Nashville, TN 5,414,759 $29.63 8.7 % 6.4 % 895,902 6.01 % 3.10 %
Norfolk, VA 2,328,115 $23.06 11.0 % 9.9 % 24,622 1.45 % 1.45 %
Orlando, FL 5,803,544 $25.34 11.7 % 10.1 % 46,760 -4.12 % -4.12 %
Raleigh-Durham, NC 6,812,575 $28.96 6.3 % 6.1 % 12,602 1.57 % 4.09 %
Richmond, VA 6,972,914 $23.64 12.4 % 10.9 % 100,171 1.59 % -2.88 %
Savannah, GA 645,713 $21.70 9.1 % 12.8 % -24,415 0.00 % 0.00 %
South Florida 25,247,095 $41.24 14.3 % 13.8 % 105,963 2.89 % 5.86 %
> Fort Lauderdale 6,342,293 $35.22 13.8 % 13.2 % 36,314 3.32 % 6.31 %
> Miami 12,853,209 $46.36 15.0 % 14.6 % 68,331 3.61 % 8.31 %
> Palm Beach 6,051,593 $35.16 13.3 % 12.9 % 1,318 -0.22 % 0.54 %
Tampa Bay, FL 6,626,575 $27.84 11.1 % 11.1 % -2,942 1.84 % 7.19 %
11 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International11
United States - Downtown - Class A
MARKET INVENTORY (SF) DEC 31, 2016
AVG ANNUAL QUOTED RENT (USD/SF)
VACANCY RATE SEP 30, 2016
VACANCY RATE DEC 31, 2016
ABSORPTION (SF) Q4 2016
QUARTERLY CHANGE IN RENT
ANNUAL CHANGE IN RENT
MIDWEST 153,267,079 $27.39 12.1 % 12.7 % 517,460 7.73 % 3.35 %
Chicago, IL 64,528,875 $42.46 10.9 % 11.9 % 556,311 3.12 % 2.51 %
Cincinnati, OH 8,137,243 $23.78 12.8 % 12.5 % -8,743 -1.98 % 4.30 %
Cleveland, OH 9,831,957 $21.63 16.2 % 15.1 % 110,748 1.72 % 1.86 %
Columbus, OH 9,056,062 $21.84 10.9 % 9.7 % 128,737 2.92 % 4.30 %
Dayton, OH 2,369,290 $17.46 25.6 % 25.3 % 6,825 7.41 % 3.22 %
Detroit, MI 7,276,729 $23.49 4.4 % 8.0 % -259,048 0.64 % 16.40 %
Indianapolis, IN 6,090,252 $22.63 19.2 % 19.0 % 10,467 1.71 % 4.62 %
Kansas City, MO 10,847,381 $19.47 13.2 % 13.2 % 14,868 0.12 % 2.84 %
Milwaukee, WI 6,260,531 $21.58 16.2 % 16.5 % -23,436 -2.12 % -0.02 %
Minneapolis-St. Paul 20,162,287 $17.46 11.3 % 13.2 % -80,350 2.00 % 3.21 %
> Minneapolis 17,388,327 $18.23 11.6 % 13.9 % -96,388 1.96 % 5.31 %
> St. Paul CBD 2,773,960 $13.75 9.3 % 8.7 % 16,038 0.73 % -0.43 %
Omaha, NE 3,515,362 $21.05 7.1 % 7.2 % -4,568 0.24 % 4.88 %
St. Louis, MO 5,191,110 $18.96 15.8 % 14.6 % 65,649 0.74 % 0.85 %
WEST 189,079,743 $45.76 10.3 % 10.5 % 377,244 -2.85 % 3.69 %
Downtown Bakersfield, CA 788,282 $20.48 5.8 % 5.8 % 0 0.00 % -2.48 %
Denver, CO 22,673,440 $35.20 13.2 % 14.5 % 5,629 -0.17 % -1.01 %
Fresno, CA 907,513 $24.00 11.9 % 12.2 % -3,208 0.00 % 0.00 %
Downtown Los Angeles, CA 18,098,000 $41.40 15.4 % 15.3 % 25,700 0.26 % 1.40 %
Honolulu, HI 4,966,720 $35.39 13.7 % 16.5 % -84,427 -0.03 % -0.59 %
Las Vegas, NV 1,232,341 $33.52 19.5 % 18.7 % 10,424 -0.25 % 9.53 %
Phoenix, AZ 9,467,087 $26.00 19.0 % 19.3 % -32,378 2.46 % 4.82 %
Portland, OR 12,120,468 $32.70 10.3 % 11.2 % -26,373 -0.12 % 3.15 %
Reno-Sparks, NV 779,707 $23.29 12.8 % 12.8 % 159 -0.13 % -3.88 %
Sacramento, CA 5,369,452 $33.84 13.0 % 12.1 % 60,177 0.00 % 1.44 %
San Diego, CA 6,541,356 $35.76 11.6 % 7.5 % 110,472 1.71 % 6.81 %
San Francisco Bay Area, CA 81,677,472 $67.04 6.7 % 6.6 % 104,146 -3.98 % 8.24 %
> East Bay 18,749,026 $43.58 5.6 % 5.6 % 8,401 2.36 % 4.13 %
> San Francisco 59,122,564 $74.62 6.7 % 6.7 % 53,988 -3.77 % -1.69 %
> Silicon Valley 3,805,882 $44.72 11.2 % 10.2 % 41,757 5.72 % 9.02 %
Seattle, WA 21,626,940 $43.49 9.4 % 11.3 % 215,962 -0.09 % 3.23 %
Stockton, CA 2,830,965 $17.93 15.1 % 15.5 % -9,039 0.88 % 1.49 %
(continued)
12 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International
United States - Suburban - All Classes
MARKET INVENTORY (SF) DEC 31, 2016
NEW SUPPLY Q4 2016 (SF)
UNDER CONSTRUCTION (SF)
VACANCY RATE SEP 30, 2016
VACANCY RATE DEC 31, 2016
ABSORPTION Q4 2016 (SF)
YTD ABSORPTION (SF) 2016
USA 4,109,141,748 7,849,617 67,458,309 12.9 % 12.8 % 11,731,125 48,366,948
NORTHEAST 1,066,461,508 736,513 10,849,279 14.1 % 14.1 % 810,423 7,326,252
Baltimore, MD 76,327,666 245,540 1,457,721 10.9 % 10.7 % 369,933 991,431
Boston, MA 127,348,071 197,891 2,139,533 14.9 % 15.3 % -329,089 1,651,047
Hartford, CT 31,279,358 0 32,000 10.6 % 7.9 % 90,733 138,097
New Hampshire Markets 17,685,703 0 70,000 12.2 % 11.1 % 205,103 437,630
New York City Metro 350,450,422 43,759 1,088,815 13.8 % 13.8 % -301,816 2,886,076
> Central New Jersey 86,377,974 43,759 68,000 13.1 % 13.5 % -212,326 1,523,529
> Long Island 75,576,318 0 729,815 7.9 % 8.1 % -160,560 437,630
> Northern New Jersey 120,750,482 0 245,000 17.2 % 16.9 % 46,669 -67,335
> NYC Northern Suburbs 67,745,648 0 46,000 15.3 % 15.3 % 24,401 992,252
Philadelphia, PA 103,294,940 66,073 733,918 12.3 % 13.0 % 144,636 857,152
Pittsburgh, PA 72,962,285 44,000 456,659 7.6 % 8.0 % -227,966 555,907
Washington, D.C. 287,113,063 139,250 4,870,633 17.8 % 17.5 % 858,889 -191,088
SOUTH 1,291,708,489 3,102,369 24,958,631 12.5 % 12.5 % 4,354,886 15,783,465
Atlanta, GA 170,899,829 682,222 2,871,238 13.6 % 13.5 % 767,166 973,269
Austin, TX 56,077,100 224,819 1,129,926 9.8 % 9.5 % 413,086 885,528
Birmingham, AL 13,935,186 0 0 13.9 % 14.2 % 116,149 76,570
Charleston, SC 9,932,461 41,743 281,257 7.9 % 9.0 % -43,271 124,456
Charlotte, NC 65,827,013 936,807 1,132,509 8.6 % 9.2 % 442,335 1,721,379
Columbia, SC 4,936,843 0 0 22.2 % 19.7 % 105,139 124,746
Dallas-Ft. Worth, TX 277,001,073 658,663 10,889,384 14.7 % 14.7 % 632,317 4,140,165
> Dallas 253,484,312 647,663 10,657,210 14.7 % 14.5 % 1,069,356 4,254,720
> Fort Worth 23,516,761 11,000 232,174 14.4 % 16.3 % -437,039 -114,555
Greenville, SC 6,428,775 0 0 18.1 % 18.5 % 4,493 241,527
Houston, TX 187,973,435 0 1,947,423 17.5 % 17.6 % -172,233 -157,479
Huntsville, AL 18,559,966 10.1 % 13.3 % -72,113 147,548
Jacksonville, FL 46,599,550 0 116,520 9.4 % 9.0 % 590,743 1,595,638
Memphis, TN 22,067,705 0 984,829 12.9 % 13.1 % 32,122 -93,522
Nashville, TN 36,929,224 313,000 803,000 3.8 % 3.8 % 177,714 887,120
Norfolk, VA 34,715,263 0 20,000 11.5 % 11.1 % -18,987 209,886
Orlando, FL 55,360,506 135,000 347,288 10.2 % 9.5 % 350,573 1,529,446
Raleigh-Durham, NC 72,617,824 74,115 2,211,037 7.2 % 6.8 % 313,382 430,706
Richmond, VA 37,042,985 0 115,000 8.9 % 8.5 % 384,518 352,240
Savannah, GA 1,406,498 0 12,000 12.1 % 15.4 % -47,843 -29,985
South Florida 117,858,923 36,000 2,057,220 10.9 % 10.5 % 398,835 1,948,181
> Fort Lauderdale 31,835,534 0 625,979 11.6 % 11.4 % 123,153 758,880
> Miami 59,096,268 0 1,346,381 9.5 % 8.8 % 192,525 648,615
> Palm Beach 26,927,121 36,000 84,860 13.2 % 13.1 % 83,157 540,686
Tampa Bay, FL 55,538,330 0 40,000 12.8 % 12.7 % -19,239 676,046
13 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International13
United States - Suburban - All Classes
MARKET INVENTORY (SF) DEC 31, 2016
NEW SUPPLY Q4 2016 (SF)
UNDER CONSTRUCTION (SF)
VACANCY RATE SEP 30, 2016
VACANCY RATE DEC 31, 2016
ABSORPTION Q4 2016 (SF)
YTD ABSORPTION (SF) 2016
MIDWEST 708,797,890 326,194 6,701,729 13.2 % 13.0 % 1,674,749 8,014,232
Chicago, IL 159,183,744 0 0 18.1 % 18.4 % -378,004 -2,689,337
Cincinnati, OH 45,777,966 789,644 14.8 % 14.7 % 180,246 1,264,232
Cleveland, OH 54,632,806 537,000 12.4 % 11.7 % 315,719 1,024,250
Columbus, OH 45,026,646 595,455 8.2 % 7.9 % 298,863 581,891
Dayton, OH 9,252,833 20.1 % 20.0 % 12,520 64,530
Detroit, MI 140,310,827 72,700 706,481 13.1 % 12.6 % 802,345 5,417,714
Indianapolis, IN 25,869,888 113,994 323,886 13.8 % 15.3 % -42,624 187,535
Kansas City, MO 60,094,034 0 1,194,963 10.0 % 10.5 % -94,508 740,689
Milwaukee, WI 27,339,064 0 1,528,000 12.7 % 11.3 % -205,794 152,473
Minneapolis-St. Paul 83,018,951 139,500 474,300 10.1 % 9.4 % 471,064 305,669
Omaha, NE 21,490,387 8.4 % 7.8 % 179,732 487,141
St. Louis, MO 36,800,744 0 552,000 11.0 % 10.6 % 135,190 477,445
WEST 1,042,173,861 3,684,541 24,948,670 12.0 % 11.7 % 4,891,067 17,242,999
Bakersfield, CA 6,348,765 85,800 8.0 % 8.4 % -16,780 -22,086
Denver, CO 105,776,931 53,600 2,864,250 10.8 % 10.9 % 106,791 1,133,503
Fresno, CA 18,584,019 33,686 0 10.6 % 10.6 % 17,459 289,745
Greater Los Angeles, CA 271,358,493 235,300 3,422,800 14.0 % 13.7 % 1,689,200 4,133,200
> Inland Empire 20,457,700 0 63,000 15.2 % 14.6 % 231,800 351,900
> Los Angeles 168,354,229 235,300 2,186,400 14.9 % 14.4 % 735,500 2,237,500
> Orange County 82,546,564 0 1,173,400 11.8 % 11.9 % 721,900 1,543,800
Honolulu, HI 7,496,373 11.0 % 10.4 % 27,612 69,156
Las Vegas, NV 38,971,242 134,003 10,000 18.7 % 18.3 % -376,337 246,507
Phoenix, AZ 120,662,600 411,853 776,174 16.2 % 15.4 % 923,499 3,172,137
Portland, CA 56,672,292 57,400 658,762 7.9 % 7.7 % 128,184 1,183,258
Reno-Sparks, NV 7,191,541 0 0 11.2 % 11.8 % -37,313 -11,849
Sacramento, CA 55,805,008 251,770 138,850 15.9 % 15.7 % 451,539 736,735
San Diego, CA 74,017,122 0 290,602 11.7 % 10.8 % 572,674 1,276,064
San Francisco Bay Area, CA 169,383,849 687,635 12,705,429 8.0 % 8.3 % 273,972 2,191,812
> East Bay 48,636,246 0 680,227 10.1 % 10.5 % 141,174 1,210,487
> Fairfield, CA 5,055,655 0 101,000 17.6 % 16.6 % 14,401 63,521
> San Francisco Peninsula 41,222,537 687,490 1,316,533 6.7 % 7.0 % -400,052 -535,827
> Silicon Valley 74,469,411 145 10,607,669 6.7 % 6.9 % 518,449 1,453,631
Seattle-Puget Sound, WA 109,905,626 1,819,294 3,996,003 7.9 % 7.9 % 1,130,567 2,844,817
> Bellevue 38,417,412 345,821 1,216,245 6.9 % 6.8 % 99,930 891,710
> Everett 10,854,767 0 0 8.5 % 8.6 % 411 129,370
> Seattle 38,316,931 1,473,473 2,779,758 6.9 % 5.8 % 1,472,200 2,107,775
> Tacoma 22,316,516 0 0 10.9 % 12.8 % -441,974 -284,038
(continued)
14 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International
United States - Suburban - Class A
MARKET INVENTORY (SF) DEC 31, 2016
AVG ANNUAL QUOTED RENT
(USD/SF)
VACANCY RATE SEP 30, 2016
VACANCY RATE DEC 31, 2016
ABSORPTION (SF) Q4 2016
QUARTERLY CHANGE IN RENT
ANNUAL CHANGE IN RENT
USA 1,641,010,502 $29.13 13.1 % 13.1 % 4,732,037 0.47 % 2.99 %
NORTHEAST 522,483,842 $29.48 14.1 % 14.3 % -988,889 0.56 % 1.63 %
Baltimore, MD 30,402,950 $26.46 9.3 % 9.9 % 24,791 1.08 % 5.96 %
Boston, MA 62,284,752 $27.74 12.8 % 13.6 % -421,723 0.86 % 7.12 %
Hartford, CT 4,988,883 $21.28 24.4 % 15.1 % 47 -3.42 % -4.39 %
New Hampshire Markets 9,362,948 $18.82 13.4 % 12.6 % 93,212 -2.00 % -8.84 %
New York City Metro 207,793,869 $29.82 13.4 % 13.9 % -957,049 0.23 % 0.89 %
> Central New Jersey 60,011,223 $27.45 12.0 % 12.9 % -475,303 0.83 % 7.28 %
> Long Island 24,955,789 $30.67 7.8 % 8.6 % -207,815 -1.12 % 0.09 %
> Northern New Jersey 87,932,933 $29.98 15.8 % 15.9 % -112,189 1.37 % 2.33 %
> NYC Northern Suburbs 34,893,924 $32.76 14.0 % 14.1 % -161,742 -2.59 % -7.02 %
Philadelphia, PA 52,653,661 $27.31 8.9 % 8.8 % 118,956 0.68 % 4.11 %
Pittsburgh, PA 13,277,474 $20.17 13.7 % 13.9 % -29,669 -0.60 % -6.58 %
Washington, D.C. 141,719,305 $32.73 18.4 % 18.3 % 182,546 0.31 % 0.33 %
SOUTH 523,082,407 $28.99 12.9 % 12.9 % 2,251,591 2.36 % 5.19 %
Atlanta, GA 83,026,556 $27.73 11.9 % 12.4 % 262,931 0.99 % 6.69 %
Austin, TX 26,415,293 $35.54 10.2 % 9.5 % 200,832 3.34 % 4.07 %
Birmingham, AL 8,460,525 $21.73 12.1 % 12.8 % 84,583 16.82 % 0.47 %
Charleston, SC 3,449,542 $26.09 6.9 % 9.9 % -61,893 0.08 % -1.82 %
Charlotte, NC 24,071,409 $24.79 9.6 % 11.9 % 284,237 -3.11 % 1.50 %
Columbia, SC 1,001,972 $18.15 12.6 % 11.6 % 9,247 0.04 % 0.17 %
Dallas-Ft. Worth, TX 114,003,199 $29.18 14.8 % 14.5 % 642,917 1.04 % 4.80 %
> Dallas 109,554,958 $29.28 14.8 % 14.5 % 598,706 1.08 % 4.88 %
> Fort Worth 4,448,241 $25.95 14.8 % 13.8 % 44,211 -1.63 % 1.38 %
Greenville, SC 3,106,961 $21.59 8.0 % 10.4 % -46,021 2.31 % 8.83 %
Houston, TX 95,781,265 $33.40 19.6 % 19.6 % -19,708 -0.12 % -0.90 %
Huntsville, AL 4,001,211 $19.13 3.2 % 5.5 % -16,853 -1.17 % 0.98 %
Jacksonville, FL 9,584,978 $22.27 10.0 % 8.6 % 152,806 -0.07 % 5.42 %
Memphis, TN 8,546,923 $20.54 6.2 % 6.3 % 2,277 1.44 % -1.16 %
Nashville, TN 16,574,682 $27.20 2.6 % 4.4 % 48,163 3.39 % 4.04 %
Norfolk, VA 11,083,203 $20.00 12.2 % 11.4 % -78,305 2.10 % -3.45 %
Orlando, FL 19,409,776 $23.30 9.8 % 8.7 % 299,371 -0.12 % 4.25 %
Raleigh-Durham, NC 28,394,271 $25.13 7.2 % 6.8 % 161,497 2.86 % 5.02 %
Richmond, VA 14,141,405 $18.93 9.8 % 9.4 % 173,008 -1.50 % -0.49 %
Savannah, GA 488,384 $22.76 9.5 % 10.1 % -3,194 1.50 % 2.90 %
South Florida 33,672,216 $33.67 13.6 % 13.0 % 52,138 1.91 % 3.30 %
> Fort Lauderdale 10,285,754 $30.54 13.9 % 13.3 % -5,619 2.79 % 5.48 %
> Miami 14,884,844 $37.18 11.8 % 11.1 % 42,288 1.50 % 6.36 %
> Palm Beach 8,501,618 $32.15 16.2 % 16.1 % 15,469 1.91 % -4.03 %
Tampa Bay, FL 17,868,636 $25.74 11.0 % 10.3 % 103,558 2.50 % 4.65 %
15 U.S. Research Report | Q4 2016 | Office Market Outlook | Colliers International15
United States - Suburban - Class A
MARKET INVENTORY (SF) DEC 31, 2016
AVG ANNUAL QUOTED RENT
(USD/SF)
VACANCY RATE SEP 30, 2016
VACANCY RATE DEC 31, 2016
ABSORPTION (SF) Q4 2016
QUARTERLY CHANGE IN RENT
ANNUAL CHANGE IN RENT
MIDWEST 259,432,651 $23.80 13.8 % 14.1 % 124,869 -0.46 % 5.10 %
Chicago, IL 81,961,999 $28.01 20.1 % 20.9 % -645,822 0.06 % 4.91 %
Cincinnati, OH 17,906,199 $21.62 14.6 % 14.0 % 146,317 -1.18 % -0.88 %
Cleveland, OH 10,437,444 $19.68 10.6 % 10.2 % 102,216 -3.86 % -1.05 %
Columbus, OH 19,274,502 $19.27 7.2 % 7.5 % 116,103 -7.24 % -6.48 %
Dayton, OH 2,220,911 $19.74 24.5 % 24.1 % 10,716 -1.12 % -5.30 %
Detroit, MI 37,220,482 $21.84 11.9 % 11.3 % 270,461 0.55 % 3.56 %
Indianapolis, IN 11,904,234 $20.73 13.4 % 15.1 % 140,457 -0.10 % 3.73 %
Kansas City, MO 18,052,425 $21.64 9.7 % 10.6 % 58,309 1.38 % 1.37 %
Milwaukee, WI 10,012,246 $21.48 9.9 % 12.1 % -213,724 6.80 % 7.28 %
Minneapolis-St. Paul 28,053,003 $16.38 11.0 % 10.9 % 46,414 0.04 % 6.48 %
Omaha, NE 5,610,826 $28.15 3.4 % 3.7 % 54,893 -0.70 % 2.43 %
St. Louis, MO 16,778,380 $23.39 9.1 % 8.9 % 38,529 0.36 % -1.38 %
WEST 336,011,602 $35.43 11.2 % 10.7 % 3,344,466 -0.69 % 4.00 %
Bakersfield, CA 2,924,775 $21.76 11.8 % 11.7 % 2,456 -0.14 % -3.91 %
Denver, CO 39,397,927 $27.51 9.6 % 10.0 % 45,620 2.16 % 3.61 %
Fresno, CA 1,578,895 $27.30 12.9 % 10.0 % 20,290 3.74 % 1.31 %
Greater Los Angeles< CA 61,744,182 $35.56 13.4 % 13.2 % 432,400 0.51 % 6.31 %
> Los Angeles 27,570,600 $36.23 14.7 % 13.5 % 307,000 0.09 % 2.50 %
> Orange County 34,173,582 $35.25 12.4 % 12.8 % 125,400 2.62 % 10.13 %
Las Vegas, NV 5,380,316 $32.25 24.1 % 25.9 % -215,177 1.55 % 0.62 %
Phoenix, AZ 37,151,050 $28.31 14.9 % 13.5 % 648,787 -0.20 % 4.86 %
Portland, OR 14,478,445 $27.79 9.6 % 9.3 % 38,996 3.76 % 8.75 %
Reno-Sparks, NV 847,224 $21.31 10.1 % 10.3 % -1,476 1.72 % 3.23 %
Sacramento, CA 14,065,900 $23.34 14.6 % 14.4 % 454 0.45 % 1.46 %
San Diego, CA 24,897,673 $38.32 12.9 % 12.2 % 89,013 -2.23 % -6.01 %
San Francisco Bay Area, CA 87,812,028 $47.65 8.5 % 8.1 % 775,232 3.73 % 7.65 %
> East Bay 19,929,276 $36.22 9.7 % 9.2 % 101,827 3.44 % 9.68 %
> Fairfield, CA 2,002,513 $26.52 15.9 % 15.1 % 1,534 0.47 % 3.61 %
> San Francisco Peninsula 24,043,827 $59.30 7.7 % 6.8 % -20,351 5.78 % 9.94 %
> Silicon Valley 41,836,412 $51.66 8.0 % 8.0 % 692,222 2.31 % 4.37 %
Seattle-Puget Sound, WA 45,733,187 $36.84 8.6 % 7.5 % 1,507,871 -8.57 % -4.83 %
> Bellevue 19,496,153 $40.12 7.7 % 7.3 % 36,912 -2.14 % 1.47 %
> Everett 1,461,153 $26.95 15.7 % 15.6 % 2,101 -0.30 % -0.14 %
> Seattle 18,472,138 $38.01 6.6 % 4.6 % 1,459,960 -7.40 % -6.61 %
> Tacoma 6,303,743 $30.32 14.8 % 14.6 % 8,898 -25.55 % 17.06 %
(continued)
16 North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International
Copyright © 2017 Colliers International.The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
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United States | Office Investment
MARKETCBD
SALES PRICE (USD PSF)
CBD CAP RATE
SUBURBAN SALES PRICE
(USD PSF)
SUBURBAN CAP RATE
USA $391 5.6% $204 6.9%NORTHEAST $420 5.0% $212 7.1%Baltimore Metropolitan Area $112 7.7% $163 Boston $635 5.0% $162 7.0%Hartford $95 8.1%New York City Metro $762 5.0% $196 7.7%Philadelphia $233 6.3% $204 7.4%Washington, D.C. $488 5.2% $208 6.4%SOUTH $192 6.4% $173 7.4%Atlanta $223 6.7% $152 7.2%Austin $398 5.7% $242 6.8%Birmingham $140 8.5%Charlotte $130 5.9%Dallas-Ft. Worth $230 5.7% $204 6.7%Houston $212 5.0% $208 7.0%Huntsville $162 $218 8.0%Jacksonville $124 $86 Memphis $393 5.3% $269 6.4%Nashville $142 7.3%Norfolk $166 6.8% $172 7.3%Orlando $125 7.8% $120 8.0%Raleigh-Durham $240 6.7% $202 7.0%Richmond $270 $172 6.6%Savannah $147 7.8% $152 8.3%South Florida $160 8.5% $180 8.5%Tampa Bay $169 7.1% $151 7.4%MIDWEST $180 6.4% $139 8.0%Chicago $300 5.5% $132 7.4%Cincinnati $111 5.8% $141 7.8%Cleveland $75 $106 8.5%Columbus $117 8.1%Dayton $127 8.1%Detroit $147 $100 8.1%Indianapolis $110 $126 7.3%Kansas City $145 7.3% $142 7.5%Milwaukee $175 8.2% $110 9.0%Minneapolis-St. Paul $187 6.8% $111 7.2%St. Louis, MO $100 $136 8.1%WEST $326 5.1% $288 6.1%Denver $269 5.8% $185 7.0%Fresno $240 7.3% $260 6.8%Greater Los Angeles $377 4.6% $430 5.6%Phoenix $157 6.8% $219 6.8%Portland $295 5.4% $167 6.5%Sacramento $261 7.0% $236 7.9%San Diego $243 5.6% $284 6.5%San Francisco Bay Area $304 5.1% $374 5.9%Seattle-Puget Sound $592 5.1% $280 5.9%
Sources: Colliers International, Real Capital Analytics
OFFICE SERVICES CONTACTCynthia Foster
President, National Office Services | USA
+1 212 716 [email protected]
RESEARCH CONTACTSStephen Newbold
National Director of Office Research | USA+1 202 534 3630
Pete Culliney Director of Research | Global
+1 212 716 3689 [email protected]
CONTRIBUTORSAndrew Nelson
Chief Economist | USA
Jeff Simonson U.S. Senior Research Analyst | USA
AJ Paniagua U.S. Research Analyst | USA
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