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Office rents across the U.S. are ticking up.
The average asking rent in May for office buildings over 50,000 square feet in size rose 0.4 percent compared to the previous three-month period, coming in at $36.33, according to data firm Yardi Matrix’s recent national report, covered by Connect Commercial Real Estate.
The growth stems from solid demand thanks to a healthy job market. But the slowness of the growth comes from employers’ selectivity about their office space needs. The average national vacancy rate, 13.7 percent, didn’t budge over the same timeframe, according to Yardi.
However, some cities saw much larger spikes in their average asking rents.
In Brooklyn, there was a 10 percent boost in May, which was followed by Houston and San Francisco (3.8 percent) and Orlando (3.1 percent), according to Yardi. Brooklyn also has the highest percentage of its stock under construction — 15.8 percent.
Manhattan saw an average asking rent increase of 0.7 percent. That counters what happened in the borough a year-and-a-half ago, when another report from Colliers International found that average asking rents slid 0.7 percent.
Manhattan also has 20.8 million square feet of space in the pipeline, the most in the country, according to Yardi. Though that looks like a lot, the market likely can absorb it, the report found. In 2018, Manhattan had a record-breaking year for office leasing.
Miami trailed Manhattan, with asking rents in that city rising 0.6 percent. Los Angeles’ figure fell more in line with the national average increase, a bump of just 0.3 percent.
Chicago was one metro where asking rents dipped by 0.3 percent.
One red flag is the 173 million square feet of office product being built across the country. But that construction is confined mostly to cities that need extra or newer office space, according to Yardi. [Connect] — Mary Diduch