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Office market sees rising rents, but slowing absorption
A rising tide of new office projects may be skewing the national average rental rate upward and obscuring increased leasing challenges for second-generation properties in many markets, according to Transwestern’s third quarter U.S. office market report.
Monthly asking rent for office properties averaged $26.97 per square foot in the third quarter, representing a 3.4 percent increase from a year earlier and a five-year gain of 19.7 percent, reports Transwestern. Much of that national increase reflects above-market rents at new or renovated projects, where landlords have incurred elevated material and labor costs to complete amenity-rich offerings.
The national office vacancy rate has plateaued near 9.8 percent, equal to the rate one year ago. A dozen of the 49 markets tracked by Transwestern showed negative net absorption or an increase in the volume of vacant space for the 12 months ended September. Nationwide, annualized absorption through the third quarter was 57.3