Read the latest Yardi Matrix Office Market Outlook.
The office construction pipeline is steadily contracting, with just 73.8 million square feet underway as of July, the latest Yardi Matrix US office market outlook shows.
Report Highlights
- The national office vacancy rate continues its upward trend, reaching 18.1 percent at the end of July, a 100-basis-point increase from the same time last year.
- National full-service equivalent listing rates averaged $31.67 per square foot in July, unchanged from the month prior.
- The office under-construction pipeline continued to further dwarf, featuring 73.8 million square feet under construction as of July.
- Nationwide office transaction volume totaled $17.1 billion year-to-date in July.
- Office properties traded at an average of $173 per square foot.
Office vacancy rate rises nationwide
The national office vacancy rate reached 18.1 percent at the end of July, marking a 100-basis-point rise from the same period in 2023. Vacancy rates have risen in nearly all markets, with San Francisco (420 basis points), Dallas (340 basis points), Boston and the Bay Area (280 basis points), as well as Seattle and San Diego (260 basis points) experiencing the most significant year-over-year increases as of July.
National full-service equivalent listing rates averaged $31.67 per square foot in July, remaining unchanged from the previous month. Among the markets with the highest year-over-year increases in in-place rents were Miami (5.9 percent), Dallas (5.2 percent), Atlanta (3.9 percent), Tampa, Fla. (3.9 percent), Philadelphia (2.6 percent) and Boston (2.4 percent).
Three markets exceed $1 billion in office sales
The office construction pipeline continues to shrink, with 73.8 million square feet under development as of July, representing 1.1 percent of total inventory. Construction starts have declined over the past two years, reducing the pipeline by 26 million square feet this year.
Following a post-pandemic surge fueled by venture capital, interest in life sciences has waned, significantly slowing new lab space development in 2024. Life sciences now account for just 11 percent of all starts, down from over 25 percent in 2022 and 2023.
Boston, the U.S.'s largest life sciences hub, had an active pipeline of nearly 11 million square feet, or 4.4 percent of its total inventory. Austin followed with 4.3 million square feet under development, representing 4.6 percent of its stock. Miami ranked third with 2.8 million square feet (3.9 percent of stock), closely trailed by San Diego with 3.6 million square feet, or 3.7 percent of its inventory. Nashville had 2.1 million square feet under construction, making up 3.6 percent of its total stock.
Office investment in the first seven months of 2024 totaled $17.1 billion, according to Yardi Matrix data. The average sale price for a property was $173 per square foot. Manhattan led in office sales, surpassing $2 billion in total, followed by Washington, D.C., with $1.5 billion in transactions. The Bay Area ranked third, with $1 billion in office sales.
Read the full Yardi Matrix Office Market Report: August 2024.
Add Comment