Rents Hold Steady Despite Softening Fundamentals

While most metros saw positive absorption in the fourth quarter, overall net absorption is down year over year. Growth, albeit slowing, should continue this year, with U.S. office-using employment growth expected to fall from 2.4% in 2016 to 1.4% in 2017. Financial, insurance, real estate and tech firms will continue to dominate leasing activity.


  • Rents remained strong in the top U.S. office markets in the fourth quarter, with half the markets we track continuing to see growth in rates.
  • The cyclical slowdown continued, with more than half the markets seeing an increase in vacancy.
  • Construction activity is easing and increasingly led by build-to-suit projects.
  • Despite a flat vacancy rate, New York performed strongly throughout 2016, recording its second-highest annual leasing total in the past 10 years.
  • The San Francisco Bay Area remains the tightest of the top 10 markets with a 5.6% vacancy rate. In core Silicon Valley markets, vacancy is as low as 2%.
  • Fueled by Amazon and other tech giants, Seattle showed the greatest improvement among the top 10 markets. Houston looks to be stabilizing after its prolonged downturn following the energy crisis.