U.S. Office Market Posts Strong Third Quarter Absorption

With the construction pipeline all but shut down and reduced rents prompting many tenants to trade up for better or more efficient space, the U.S. office market absorbed a strong 19 million square feet in the third quarter, according to data presented this week at CoStar Group’s Third-Quarter 2011 Office Review & Outlook.

The leasing activity helped lower the national office vacancy rate slightly to about 13.1% — down nearly a half percentage point since hitting its peak a year ago. Should leasing activity remain at the level seen this past quarter, it would set the stage for future rent increases, since little to no new supply is being added. CoStar’s analysis found office rents firming or already trending up in some key metros, and more increases are expected to spread across the country by 2013.