U.S. office markets remain solid as rents peak and vacancy levels off

The U.S. office market has remained solid as rents peaked and vacancy has leveled off, according to Colliers. Major office markets in the United States largely remained strong during the second quarter, with no broad change in momentum. Rents were flat in six of the top 10 metro markets tracked in this report, while rising in the other four.

At the same time, two key factors point to upward pressure on vacancy rates: tenant downsizing and new supply. In second quarter 2017, absorption rose in six of the 10 markets and fell in four. Taking into account new supply, vacancy rose in four markets, fell in three and remained unchanged in three — about the same as in first quarter 2017.

Three markets — Manhattan, the San Francisco Bay Area and Seattle — have office vacancy rates well under 10 percent and saw no increases in the second quarter. These rates are substantially lower than those in the other seven markets. Rents appear to be close to peaking in San Francisco