April 5, 2017
A Macro Perspective: Where Are We Now?
- CBRE Econometric Advisors projects positive net absorption and continued rent growth for the North American suburban office market through 2018. Submarkets with high-quality amenities and efficient buildings capable of handling denser employee layouts will likely perform the best.
- Due to improving tenant demand and low overall levels of new supply, the U.S. suburban office vacancy rate has not increased for 27 straight quarters. The vacancy rate was 14.1% in Q4 2016, just 20 basis points (bps) above the prerecession low in Q2 2007.
- Many previously lagging suburban markets—including multiple Florida markets, Detroit, Milwaukee, Phoenix, Long Island, Inland Empire and Los Angeles— posted year-over-year vacancy rate decreases of 200 bps or more in Q4 2016, underscoring the geographic breadth of the suburban recovery.
- Despite evidence that Canadian companies have been relocating to downtown markets to attract millennial talent, the Canadian suburban office market recorded positive absorption and only a slight uptick in vacancy in 2016.
- Due to the struggling energy sector and new suburban supply coming on line, the Canadian office vacancy rate is expected to hover around 16% overall this year.
Want to learn more? Listen to CBRE’s Capital Markets, Investor Leasing and Research leaders discuss the latest suburban office trends on a recording of our recent Flash Call.