New York, Jan 16 :
New demand for US office space slipped in the fourth quarter from three months
ago and a year earlier as job growth remained sluggish, according to a
report.
Tenants took on 3.7 million square feet of additional office
space in the fourth quarter, down from 4.8 million in both the third quarter and
the year-earlier period, according to the report released by real estate
research firm Reis Inc.
"Without a robust labor market recovery there
will be no robust office market recovery," said Ryan Severino, senior economist
for Reis.
Employers added a lackluster 155,000 jobs in December and the
unemployment rate held steady at 7.8 percent, the government said.
The
office vacancy rate in the quarter was 17.1 percent, far higher than the 12.6
percent recorded at the end of 2007 right before tenants gave up space in the
financial crisis.
The vacancy rate, however, edged lower by one-tenth of
one percentage point in the quarter as developers added only 3.2 million square
feet of space, less than renters took on. U.S. office inventory amounts to 4.09
billion square feet, according to Reis.
Weak demand for space gives
developers little reason to build, Severino said. Lenders continue to impose
more stringent requirements on developers before they will provide construction
financing, he said.
The vacancy rate peaked at 17.6 percent in the
financial crisis.
Average rental rates, adjusted for discounts and
incentives offered by landlords, grew by a weak 0.8 percent in the quarter to
$22.96 per square foot per year, Severino said.
The cities with the
tightest markets continue to be those with stronger technology or energy sectors
in their economies. Rents in San Francisco, for example, rose 3.6 percent, the
most of any of 79 markets, to $34.69 per square foot. The vacancy rate in San
Francisco was 13.8 percent.
Washington, D.C. has the tightest market of
all at the moment, with a vacancy rate of 9.3 percent. But Severino expects New
York to take that title soon as its increasingly important technology sector
takes more space and as the government in Washington cuts employment.
The
vacancy rate in New York was 9.9 percent in the quarter, two-tenths of a
percentage point better than three months earlier. The average rental rate in
New York was $48.55 per square foot, up 1.4 percent in the
quarter.
Ends
SA/EN
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