Top 10 Metros for Office Space Growth

Initial signs of a turnaround are beginning to appear in the U.S. office market. The national office vacancy rate dropped during 2010’s third quarter for the first time since 2007, and the market posted its second quarter of positive absorption after nine consecutive quarterly declines, according to Colliers International.

Office rents were mixed, with average downtown and suburban rents rising but most metropolitan areas still characterized by declining rents. Nevertheless, the absorption trend holds some promise of a new up cycle. The number of downtown Class A markets with positive absorption increased from 21 in the first quarter to 30 in the third quarter, and the number of suburban Class A markets with positive absorption increased from 25 to 32 during the same period. The strongest markets were mostly on the East and West coasts. Washington, D.C., was the only metro on both lists, benefitting from a surge in government leasing activity, according to Cushman & Wakefield Inc.

The upshot for ULI members is that the overall recovery in the U.S. office market is expected to be slow and long. Below are lists of major metros with the best year-to-date net absorption in downtown and suburban Class A office space:

(Source: Colliers International.)

(Source: Colliers International.)