Demand for office space grew by 287,523 square feet, the most in seven quarters. However, the total growth for the year only reached 191,685 square feet. It was below 2017 levels when demand grew by 666,279 square feet.
Demand for Class A space was the most significant contributor to the positive absorption. During the quarter, demand for high-end space grew by 317,533 square feet, bringing the total for the year to 394,613 square feet. It was down from 681,185 square feet in 2017.
The demand for Class B and C space fell by 30,010 square feet in the fourth quarter, lowering the net absorption in 2018 to negative 202,928 square feet. This compares to negative 14,906 square feet of absorption in 2017.
Three buildings were completed during the fourth quarter, adding 291,724 square feet of product. Of the space brought to market, more than 87 percent was occupied upon delivery.
United Therapeutics Corporation’s building at 1000 Spring Street was the largest delivery of the quarter. The building totaled 121,724 square feet.
The vacancy rate remained the same from last quarter as the impact of new supply offset downward pressure caused by new demand.
The vacancy rate has fallen marginally from 14.9 percent at the beginning of the year, to end 2018 at 14.7 percent.
The direct average asking rental rate decreased by $0.07 or 0.3 percent to $27.83 per square foot during the quarter. It increased 1.9 percent from the start of 2018.
The average Class A asking rate grew by $0.02 or 0.1 percent during the quarter to end at $29.10 per square foot and was up 1.6 percent from the start of 2018.
A $0.28 decrease in the average Class B asking rate offset the impact of the Class A growth on the overall market rate. The Class B rate ended the year at $26.13 per square foot. Although down for the quarter, it was up 2.3 percent for the year.