ZIG ZAGGING UPWARD
Moving in the right direction. That's the proclamation made about theoffice sector by Cassidy Turley chief economist Kevin Thorpe after a recent study of 82 markets showed 52 had increases in net absorption. What's more: In Q1 '11, net demand registered at 7.5M SF and vacancy fell 30 bps from the previous quarter to 16.5 %. The US office sector saw rents rise five cents this quarter to $21.36.Demand recovery in 2010 was primarily concentrated in DC, New York, and Dallas and is now spreading more evenly across the US, Kevin tells us.
Dallas will stay near the top going forward, Kevin tells us. (Sigh of relief.) Labor markets are rebounding, and strong growth in IT and thesemiconductor industry is once again fueling the local economy and providing demand for real estate, he says. Nationally, the strong rebound in office sales provides the clearest indication that the sector recovery is gaining speed. In analyzing data from Real Capital Analytics, Cassidy Turley found that office sales volume is up 180% from the Q1 '10; cap rates dropped 150 bps from their peak and are settling between 7.2% and 7.4%; and vacancy rates have dropped 30 bps from the previous quarter to 16.5%. With values firming, investment sales show no signs of slowing. In February, buildings listed for sale totaled $6B, the highest monthly volume of offerings since June 2008.