- The vacancy rate increased during the first two quarters from an adjusted 11.5 to 11.8 percent.
- Absorption rebounded during the second quarter but was behind 2015’s pace.
- Build-to-suit activity increased, while speculative projects are still in a holding pattern.
- Asking rents increased by almost 3.4 percent from the end of 2015.
- Investment sales activity remained strong and the ownership mix further diversified.
The regional office market had mixed but generally positive results during the first two quarters of 2016. Lateral occupancy moves within or between submarkets and continued consolidation of multiple locations constrained absorption. As additional pending deals land in the third and fourth quarters, however, results should begin to meet expectations for stronger absorption.
The overall weighted average asking rent increased by $0.43 per square foot from the end of 2015. Class A rents increased by 3.5 percent while Class B rents had a sharper 4.3 percent jump. High demand for building amenities and increased construction costs to provide these features have resulted in higher rents and lower tenant improvement allowances.