The US office market defied the underperforming economy, racking up steady absorption in the second quarter despite a slowdown in leasing activity. It was an upside surprise, given the recent lackluster performance of GDP, corporate profits, job creation and business capital spending, not to mention Brexit and the faltering global economy.
- Tenants absorbed 11.3 million square feet in the second quarter, bringing the first-half total to 18.7 million square feet, on par with last year's first half.
- Construction activity continued to ramp up, ending the quarter at 93.7 million square feet in the pipeline.
- Vacancy dropped another 20 basis points to 13.5%.
- Average asking rent increased 0.3% Q/Q and 4.3% Y/Y.
Amid the most unloved economic expansion in history, occupier demand for industrial space surged to a new record in the first half of 2016, rent increases accelerated, the vacancy rate stabilized and construction activity was steady.
- Tenants and owner-users absorbed 56.9 million square feet in 2Q, bringing the first half total to a record 119.2 million square feet.
- Space under construction has plateaued since 4Q 2015.
- Vacancy was unchanged at 6.2%, a 16-year low.
- Asking rent rose strongly, up 2.1% Q/Q and 5.2% Y/Y.