With the exception of a few metropolitan areas, the recovery of office markets in the U.S. has been sluggish. Vacancy rates today are generally well above where they were when the recession began in 2008.
As of the end of 2013, the U.S. economy has recovered all the office-using jobs lost in the recession, yet the vacancy rate today is far higher than it was in 2008.
C&W estimates that about half of the reason for the higher vacancy rate is due to new construction, which has been largely confined to a few cities.
The remainder of the rise in vacancy is likely a result of more efficient use of office space.
C&W estimates that efforts to increase efficiency are having a major impact on how fast vacancy is declining.
When vacancy rates are adjusted for construction, job growth in the current expansion is reducing vacancy at one-third the pace of the last recovery.
The trend toward using space more efficiently is expected to continue leading to less absorption per job than in the past and creating new challenges for markets and building owners.
Stronger employment growth during the next two years should lead to greater absorption and faster declines in vacancy rates than the U.S. has seen thus far in the recovery, but the declines are still likely to be slower than in past recoveries. In fact, by the end of 2015 the national vacancy rate is still likely to be higher than it was when the recession began despite the fact that there will be more than a million more people employed in office-using industries than there are today.
Source : Cushman & Wakefield