The U.S. office market continued to show strength in the third quarter, as leasing activity surged with tenants finding more options among new and second-generation blocks of space, according to JLL research.
This quarter’s leasing volume reached 62.4 million square feet, the highest figure in more than two years, according to JLL. Leases larger than 250,000 square feet drove much of the activity and totaled more than 10.9 million square feet, representing 17.5 percent of all deals done in 2017.
Even with talent shortages intensifying in many markets, tenants continued to expand. Dallas and Seattle-Bellevue led the way, claiming 35.6 percent of all U.S. growth year-to-date.
Despite increased leasing activity, vacancy has risen for the fourth consecutive quarter as new deliveries outpace absorption. Development is hovering near its cyclical high at 101.4 million square feet, but is tapering off as the rate of completions surpasses that of groundbreakings. JLL expects vacancy to increase further over the next few quarters as more than 75.4 million square feet of new product will deliver to the market through 2018, of which only 48.7 percent is preleased.
However, development activity should continue at a moderate pace, with supply and demand balancing out over the long term.
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