Growth remains “Sluggish” in U.S. office sector

U.S. office space market growth remains “sluggish” according to the latest figures released by Reis Inc., the leading independent provider of property market analysis in the U.S.

In Q4 -2012, floor space occupation grew by just 3.7m sq ft in U.S office space markets, reflective of the pensive approach employers are taking to hiring new staff during the prolonged economic recovery.

The growth nudged down the markets vacancy rate by 0.1%, taking it down to 17.1% at the end of the year.

Reis’ Q4-2012 market analysis found the average rental asking price per sq ft had risen by 0.8% during the quarter, taking it to $28.46 per sq ft.

There has been steady growth in the U.S. office space market since the start of 2011, heralding the end of the three year trend of shedding space taken on by businesses in the U.S.

So far though, expansion in the office space market has not reflected the growth that the office sector has typically seen during healthier times.

Occupancy grew by 17.2m sq ft throughout 2012; a stark contrast to the record 2005 levels of 66.7m sq ft.

Growth in 2012 left the vacancy rate just 0.5% below the post-recession high in the fall of 2010, well above the market’s peak rate in 2007; a sure-fire indicator of the sluggish growth the analyst’s at Reis Inc. have established.

The report pointed out that growth in the office sector was reflective of growth in its labour force. The U.S.’s Labour Department released figures last Friday showing that 150,000 jobs had been created in December alone.

Commenting on the findings Ryan Severino, an economist at Reis said that, "Until that starts to escalate a little more, we're probably going to see more of the same.”