Though growth in U.S. office markets will be slow and steady in 2018,  fundamentals are expected to be healthy with net absorption reaching a total of 32.1M SF.

Downtown markets, including Manhattan, San Francisco and Washington, D.C., will receive the most supply in the coming year, which will lead to a modest increase in vacancy rates, CBRE reports.

Similar to 2017, completions will also outpace net absorption nationwide. Overall rent growth is anticipated to decline from 2.4% in 2017 to 2% in 2018.

When it comes to occupiers, the tight labor market continues to be a challenge as does technology-driven competition. To compete, those in the financial, tech and even legal sectors are lowering space requirements and instead moving into prime office space with a focus on workplace design.

“Occupiers are taking a balanced approach to real estate strategy, continuing to pursue space efficiency while reinvesting savings into workplace enhancements that will help them attract and retain employees,” CBRE Global President of Advisory & Transaction Services/Occupier Whitley Collins said in a statement. 

As cloud technology and mobile work increases, flexible-serviced agreements like those offered by co-working company WeWork are also becoming a more popular option.

“We expect occupiers’ interest in shorter-term leases and third-party space aggregation to grow as these models are more widely tested and understood,” CBRE America’s Head of Occupier Research Julie Whelan said.