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Average vacancy rates across U.S. office markets remain above 14%, despite recent declines. Increases in asking rents have remained modest, growing near or at inflatiokarinn. We expect that these conditions will continue through 2014. DTZ Research forecast the vacancy rate to trend down only slightly by 2015, despite most markets being supply constrained. In consequence, we project moderate rental growth for most U.S. office markets. Notable exceptions are San Francisco, New York and Boston, where we forecast the highest costs increases in 2014. To offset these cost increases, many tenants will opt for more efficient floor plans (less space per workstation). Based on our analysis, there is more room for further efficiencies in New York, Chicago and Dallas when compared to west coast markets like San Francisco, Seattle and Los Angeles. Most landlords are expected to increase occupancy through concessions, which in some cases also offsets higher rents. Please note that we quote average asking rents excluding concessions.
In contrast to the U.S., average vacancy rates across Canadian office markets remain below 10%. However, Canadian vacancy is projected to rise in 2014 due to more sublease space and tenants that right size their space. The Canadian labor market is healthier than in the U.S. but, job growth in Canada is forecast to be moderate in 2014, triggering slow demand for space. As a result, rents are expected to hold steady in most markets. However, we do still project rent increases for prime CBD buildings with low vacancy rates, such as Toronto. With this exception, we expect that Canadian occupiers will remain in strong bargaining positions in 2014.
Source : DTZ (Groupe UGL)
