U.S. Office Market Recovery Continues

Executive Summary

• Net absorption accelerated to 4.3 million sq. ft. in Q3, marking a second consecutive quarter of positive demand.
• Construction completions fell to 3.5 million sq. ft., the smallest quarterly total in a decade.
• The overall vacancy rate held steady for a second consecutive quarter at 19% following nine quarters of increases. The prime office vacancy rate fell by 20 basis points quarter-over-quarter to 15.5%.
• Twenty-four of the 57 markets tracked by CBRE recorded positive net absorption in Q3. Manhattan led all markets with 3.4 million sq. ft.
• Average asking rent increased by 0.7% year-over-year, while average taking rent was unchanged. Tenants maintained leverage in lease negotiations, with the discount between average asking and taking rent holding steady at 11.5%.