Although the average employment rate of nationwide office is growing at a little over 2%, demand for that space grew at half that rate during the first quarter. According to the CoStar Group, despite moving in fits and starts, the recovery has helped stabilize the office market and support relatively high property valuations, but at the same time, modest job growth seen to date has yet to translate into meaningful demand for office space, causing rents to remain at ‘discount’ levels.
In order for things to really turn around, and for office operators to be able to charge higher rents, a lot of the excess space left over from the downturn must be eaten up. This process could take some time. Many believe that the office vacancy recovery is less than halfway done, and as it stands, there is more upside in the office sector than other areas of commercial real estate.
To read the full article from the CoStar Group, featuring insight from Paradigm Tax Group, click here.