CREJ - Office Properties Quarterly - July 2015
Before you read the articles highlighting Colorado statistics in this issue, I’d like to share a few national statistics to offer perspective. - To begin, the U.S. economy and employment numbers in the first quarter, while both decent, were low when compared with previous quarters. In DTZ’s U.S. office trends report, it attributes the shaky first quarter to temporary factors and expects this year to follow in 2014’s footstep – a slower first quarter followed by an overall healthy year and office sector. In fact, Cushman & Wakefield is predicting that the period from 2015 through 2017 will be the strongest three years of economic growth in the U.S. since 2004 through 2006, according to the company’s U.S. Office Market Review and Forecast. Cushman & Wakefield also predicts that employment will increase by almost 8 million jobs in the same time period. Primary office-using sectors added 50,000 jobs (lower than the six-month average of 71,000 jobs) and tenant absorption was 4.3 million square feet in the first quarter nationally, which is the lowest level of absorption since first-quarter 2011, stated Newmark Grubb Knight Frank’s National 1Q15 Office Market Report. Twenty markets registered negative net absorption for office properties, with New York City leading the pack, according to the DTZ report. However, Denver was recognized as a market with solid first-quarter demand and positive absorption, joining Dallas, Orange County, California, Columbus, Ohio, and Detroit, according to the NGKF report. Cushman & Wakefield is optimistic that the other major markets will follow, predicting that over the next three years, office absorption will total 175 million sf, which is more than the past eight years combined, said the company’s report. Denver ranks seventh for cumulative rent increases from 2014 to 2017, according to the Cushman & Wakefield report. Average asking rents across the U.S. ended the first quarter at $27.76 per sf full service, up 1.5 percent from the prior quarter and up 4 percent from first-quarter 2014, according to NGKF. And finally in the first quarter, 98.5 million sf of office space was under construction, DTZ reports. Markets in the south and west regions (where there is the greatest pressure on rental rates) accounted for three-quarters of the activity and nearly 90 percent of deliveries in the quarter. I want to thank the authors who took the time and energy to research and write articles. Please reach out to me if you have thoughts on the issue, are interested in contributing something to a future issue or would like to make sure we cover something important in an upcoming issue. I look forward to hearing from you, and thanks for reading. Michelle Z. Askeland maskeland@crej.com 303-623-1148, Ext. 104