“Secondary markets, those 18-hour cities, are poised to have the most growth over the next five years,” Colliers national director of office research Michael Roessle tells Bisnow. Here are the 18-hour cities that saw serious absorption in Q1.
Minneapolis
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Q1 Absorption: 209k SF
Vacancy: 11.3%
Under Construction: 1.8M SF
Class-B office led the way in Minneapolis during Q1, at 214k SF, compared to negative absorption of 26,012 and 76,218 in Class-A and C space, respectively. Highest demand in the city is in areas with the one-two punch of entertainment options and easy access to amenities.
Milwaukee
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Q1 Absorption: 162k SF
Vacancy: 9%
Under Construction: 0 SF
Milwaukee, on the other hand, saw all of its absorption in Class-A office space, at 179k SF compared to negative absorption for both B and C space. In the city's biggest Q1 news, Sam Zell's Equity Commonwealth sold a 373k SF Class-A tower for $60.5M to Associated Bank.
Seattle
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Q1 Absorption: 301k SF
Vacancy: 10.2%
Under Construction: 1.9M SF
Seattle investors were active in Q1, hitting over $851.4M in deals, with most of the action in suburban submarkets. Seattle is flying high on the West Coast's tech boom—not to mention being the birthplace of Amazon.
Houston
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Q1 Absorption: 168k SF
Vacancy: 15.9%
Under Construction: 1.1M SF
Despite repeated floods and rock-bottom oil prices, Houston's office absorption is going strong—and there's a hefty amount of new SF in the pipeline. Still, the oil town fell out of the top 10 North American markets for rent growth—where it used to hold fifth place.
Charlotte
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Q1 Absorption: 181k SF
Vacancy: 7.6%
Under Construction: 1.2M SF
Historically low vacancy rates are helping push up rental rates in Charlotte—as the city's booming Millennial population draws in businesses. As Trinity Partners' John Ball tells us, "The city continues to be on the radar for potential relocations thanks to our talented employee base, cost of living and (usually) great weather."
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