The office market continued going strong through Q1, as the national vacancy rate declined 10 bps during the quarter to 12.6%, 100 bps lower than last year—and 80% of metros had stable or dropping vacancy rates. Here's a look at which cities have been the hottest for office over the past year, according to Colliers' Q1 Office Market Outlook.
Atlanta
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Rent Growth: 14.36%
Average Rent: $25.81/SF
Vacancy Rate: 15.6%
There's been consistent absorption in the Big Peach over the past three years, and with no new office product delivered in 2015, the market has tightened further. Vacancy declined for a 14th straight quarter in Q1, during which it hit its lowest point in 14 years.
The East Bay, San Francisco
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Rent Growth: 30.17%
Average Rent: $43.36/SF
Vacancy Rate: 7%
The East Bay by S.F. topped all markets for office rent growth over the past year, as Oakland's tech boom picks up speed. Uber will soon open a 380k SF office space in Oakland to accommodate the company's rapid hiring.
Baltimore
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Rent Growth: 15.98%
Average Rent: $24.88
Vacancy Rate: 13%
The co-working boom has hit Baltimore, with the city's own shared office space company, Spark, expanding to accommodate demand. With the highest rent growth outside of core markets, Baltimore is putting its tech talent to good use.
San Francisco
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Rent Growth: 11.16%
Average Rent: $73.41/SF
Vacancy Rate: 7%
Not far behind East Bay is S.F. proper, also riding on the coattails of Silicon Valley. Tech firms have been moving to the city to shorten workers' travel time—to the point where even Facebook is actively looking for S.F. office space to cut commutes.
Dallas
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Rent Growth: 10.06%
Average Rent: $25.92/SF
Vacancy Rate: 23.2%
Dallas just broke our double-digit mark, escaping the woes that crude oil's price plunge have put on Houston. Dallas' central business district has been doing better than Fort Worth's, where rent growth barely broke 2%.
Midtown South, New York
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Rent Growth: 20.12%
Average Rent: $80.25/SF
Vacancy Rate: 6.3%
Midtown South's market is still the tightest in NYC, with Downtown and Midtown hitting just 3.33% and 5.57% in rent growth, respectively. Despite the white-hot conditions over the past year, demand slowed some in Q1, with -282k SF absorption.
Greenville, SC
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Rent Growth: 11.83%
Average Rent: $25.99/SF
Vacancy Rate: 16.1%
Greenville's vacancy rate hit a record low during Q1, in part due to a boom in co-working space—a recent example being the lease of 20k SF by Endeavor Greenville, a co-working concept, in the Greenville CBD. Colliers expects the rents to keep increasing and vacancy to keep decreasing throughout Q2.
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