Office Listing Rates Increase Amid Falling Vacancy
The average full-service equivalent listing rate increased by 19 cents from April, reaching $37.56 in May, the latest Yardi Matrix office report shows.
Report Highlights
- Direct asking office rents clocked in at $37.56 per square foot in May, increasing by 19 cents from April.
- Office vacancy averaged 15.4 percent across the top 50 U.S. office markets, unchanged from the same period last year.
- The under-construction pipeline included 151.2 million square feet of office space as of March.
- Office transaction volume nationwide totaled $35.3 billion at the end of May.
Some 151.2 million square feet of office space was under construction across the U.S. at the end of May, accounting for 2.2 percent of total stock. Projects in planned stages account for an additional 3.9 percent. The largest pipelines on a percentage of stock basis were in Sun Belt markets such as Austin (8.8 million square feet, 10 percent), Nashville (5 million square feet, 8 percent) and Miami (5.6 million square feet, 7.4 percent).
National average full-service equivalent listing rates were $37.56 per square foot in May, increasing by 19 cents from the previous month and down 210 basis points year-over-year. The largest gains over the year in May were recorded in Charlotte ($33.08 per square foot, 14.3 percent year-over-year increase), Boston ($39.02, 9.8 percent) and Miami ($47.08, 8.8 percent).
Office vacancy nationwide clocked in at 15.4 percent in May, down 30 basis points compared to April and virtually unchanged from May 2021. Gateway markets such as San Francisco (380 basis points), Manhattan (370 basis points) and Chicago (290 basis points) continue to struggle, recording the highest increase in vacancies on a year-over-year basis.
Deal Volume Driven by a Few High-Volume Markets
Office transaction volume in the first five months of 2022 totaled $35.3 billion, with sales surpassing the two billion mark in Seattle ($2.2 billion) and Dallas ($2.1 billion). Investment activity was also high in Los Angeles ($1.9 billion), Boston ($1.9 billion), Dallas ($1.8 billion) and Denver ($1.8 billion).
Office assets changed hands at an average $274 per square foot at the end of May. Manhattan ($967 per square foot) and San Francisco ($931 per square foot) continue to rank first on Yardi Matrix’s list, largely due to their extended Class A inventory and amenitized office buildings.
Read the full Matrix Office National Report-June 2022
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