Blog

Year Over Year Office Absorption Drops To 5 Year Low, And Other Worrisome Q1 Stats

May 2, 2017

Principal economist at Cushman & Wakefield, Ken McCarthy believes we have reached a point of inflection in the office market. Absorption remained positive and has stayed relatively flat since the 4Q 2016, as have vacancy rates. McCarthy notes that the significance of this is that the state of absorption in the office sector is due to slowing job growth and significant new supply coming online. The U.S Department of Labor Statistics reported 98,000 new jobs filled in the month of March, down from 219,000 in February, although this was expected and is expected to balance out in the months to come. The sudden decline in new jobs filled is due to factors such as weather and the retail environment according to NGKF director of research in the Americas, Robert Bach. Other factors affecting this labor market are particularly in the construction industry where companies are struggling to fill positions, and with office using companies who are not hiring. Overall however, the unemployment rate has been the lowest it has been since 2007 at 4.5% in March and McCarthy expects the office sector to continue improving, for rent growth to slow in the future, and vacancies to remain relatively unchanged.

Year Over Year Office Absorption Drops To 5 Year Low, And Other Worrisome Q1 Stats