This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

JLL Reports U.S. Office Market Makes Mild Gains In Absorption And Rent In 2012, With Stage Set For Broader Recovery In 2013

The national vacancy rate declined to 17 percent at the end of 2012 from 17.6 percent 12 months earlier, as the country experienced its 11 th consecutive quarter of occupancy growth and its eighth straight quarter of average rental rate increases. Of the 44 U.S. office markets JLL tracks, 84.1 percent experienced occupancy growth during 2012.

Despite the slight tightening of overall occupancy levels; however, the pace of the office recovery declined 19.4 percent in 2012 compared to the vibrant market experienced in 2011. California and Texas alone accounted for 60.3 percent of the country's total net absorption, Sikaitis noted.

"While the technology and energy facets of the economic engine do not appear to be pulling back, they will be joined by some other burgeoning sectors and further supported by the slow-moving economic recovery," Sikaitis said. "If momentum does pick up across the board, tenants will eventually be confronted with a dwindling amount of large-block and quality space options as the development pipeline is thin and largely consists of build-to-suits."

Only 9.8 million square feet of supply was delivered in 2012, with another 40.7 million square feet of space currently under construction. Of the 44 top U.S. office markets, 17 have less than 100,000 square feet in the construction pipeline, Sikaitis observed.  In a typical year, new office supply in the U.S. averages 50 million square feet.

Government Growth Sector

A major source of recent leasing activity and new requirements in nearly all geographies has come from the home mortgage industry.  "If housing momentum keeps up, we expect homebuilders to return to growth and come back into the market for more space over the next 18 months," Sikaitis said. "Consequently, geographies throughout Florida as well as growing markets such as Phoenix, Atlanta, Orange County and Las Vegas are likely to be some of the leading office market segments over the next two years."

The conclusion of the 2012 presidential election also brought some certainty that has translated into office demand.  The Affordable Care Act (Obamacare) and the Wall Street Reform and Consumer Protection Act (Dodd-Frank) seemed certain of implementation after the election, evidenced by a recent spurt of government office requirements on the market. Sikaitis calculated that the federal government leased more space in Metro D.C. in the six weeks following the election than in the preceding 10 months.

2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs