Cushman: Office Market Sees Positive Absorption
- Jan 13, 2011
January 12, 2011
By Allison Landa, News Editor
The U.S. office market is seeing positive absorption for the first time since 2007, according to Cushman & Wakefield. The firm released statistics indicating an overall absorption rate of positive 2.2 million square feet at the end of 2010 – a whopping 106.5 percent increase from the negative 33.5 million square feet of absorption at year-end 2009.
According to the report, increases in leasing activity and limited new construction were drivers of the positive absorption. Cushman found that overall leasing activity for U.S. central business districts totaled 62.4 million square feet at the end of 2010. That’s a 26.3 percent increase from 2009, when 49.4 million square feet were leased.
Cushman executive managing director & head of Americas research Maria Sicola said that the positive absorption portends good things for the office market’s recovery. She added that during this year, restricted new development will play a major role in sustaining that recovery.
That’s good news, because new construction is indeed limited. In 2010, there was 7.5 million square feet of new office space completed – a 40 percent drop from the 12.4 million square feet completed in 2009. It was also the lowest yearly total since 2005, when 5.2 million square feet was built.
However, rental rates remain stagnant, according to Cushman. The overall rental rate for U.S. central business districts was $36.4 per square foot at the end of 2010, a $0.09 decrease from $36.5 at the end of the third quarter.