Landlord's Market

Key Trends

  • The vacancy rate decreased during the last two quarters of 2016 from 11.8 to 11.4 percent.
  • Annual absorption totaled just under 1.0 million square feet and, while positive, was down from 2015’s annual total of 3.1 million.
  • Build-to-suit activity increased, while speculative projects were still in a holding pattern.
  • Asking rents increased by approximately $0.36 per-square-foot from the end of the second quarter to an average of $25.37 at year-end.
  • Investment sales volume was boosted by multiple portfolio transactions.

The regional office market had a solid, but not stellar performance in 2016. The vacancy rate decreased from the end of the second quarter,but ended the year at the same level as 2015. The largest lease deals were lateral moves within the market, renewals, or build-to-suit transactions that have not yet impacted absorption. There was stronger Class B absorption in a few submarkets but, overall, the flight to quality buildings was still prevalent. As the Class A supply continues to decrease, Class B buildings, particularly those that have been upgraded, are likely to have increased activity in 2017.