CHICAGO, Jan. 7, 2013 /PRNewswire/ -- The domestic office sector experienced steady but mild occupancy growth throughout 2012, buoyed by a few strong market sectors impacting leasing activity in a handful of states, according to a year-end analysis conducted by Jones Lang LaSalle (JLL). As the year drew to a close; however, several bright spots on the horizon suggested that the market expansion will broaden to other sectors and geographies in 2013.
"The vast majority of occupancy growth in 2012 was in energy-rich and technology-heavy markets in California, Texas and Colorado. Recently there's been lease activity and growth in healthcare and housing-related industries, suggesting that strong office absorption in 2013 may extend to Arizona, Nevada, Florida, Georgia and the Carolinas, among other geographies," said John Sikaitis, Director of Office Research at JLL. "However, the U.S. office market outlook is still very segmented by sector and geography, with some urban and most suburban markets facing a long road to recovery."2012 Commercial Real Estate Fourth Quarter Highlights
- Leasing levels dip again: -6.8 percent from Q3; both Q4 and 2012 leasing below respective quarterly and annual levels since recovery began.
- Absorption levels continue with 11 th consecutive quarter of occupancy growth, but vary widely by geography as the West grows and the East Coast disappears. Sunbelt markets are starting to add to the recovery. Even with continued occupancy growth in Q4, 2012 absorption levels down 19.4 percent from 2011.
- Vacancy drops, hits 17.0 percent. Vacancy levels remain near historical highs, and although CBDs are on track to reach historical vacancy rates faster than suburbs, CBD vacancy declines have slowed while suburban declines have sped up.
- Tenants have far less leverage across urbanized, core markets despite overall market pause, but rents have now inched up in nine of the past 10 quarters. Class A continues to trump commodity across the board with rents growing more than four times faster in CBDs than suburbs.