The U.S. office sector, already on an upward trend for several years, saw even more gains in absorption during the fourth quarter of 2014, according to a report from DTZ, a global commercial real estate service provider.
The country saw a net absorption of 22.4 million square feet of office space, a 48 percent increase from the same time a year prior. Meanwhile vacancy fell 30 basis points to 14.5 percent since last quarter. New construction skyrocketed, with 103.8 million square feet under construction — a 74 percent increase over the same time last year.
New York City leads the way, with a net absorption of 9.3 million square feet for 2014, more than 3.5 million of that in the fourth quarter alone. It was the metropolis’ third consecutive year of multi-million-square-foot growth. Houston and San Jose saw the next biggest numbers for 2014, with 6.6 million square feet and 4.4 million square feet, respectively.
The report suggests that the positive trends will continue into 2015 as a strong economy and low gas prices stoke the fire. Although the report notes that there are some weak economies globally that could have a slowing effect on the U.S., the country has been able to fight through.
“The U.S. economy is proving extremely resilient against the pressures of such global economic (and political) turmoil,” says the report. “In fact, the global slowdown began in earnest in mid-2014 — the point at which the U.S. economic growth began to register its strongest levels in the current expansion.”
The report predicts that, if growth holds at current pace, the office sector will reach full economic recovery by this time next year.
“After enduring three years of a lackluster recovery, the office sector now appears to be hitting its cyclical stride. Although construction is picking up, it will lag absorption once again next year.”
Click here to read the full DTZ report.
— Jeff Shaw