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The national office market fought through sluggish economic growth, Brexit and a slow summer to continue its upward trajectory in Q3, according to JLL.
Here are three things to watch for in Q4, based on Q3's activity:
1) Changes In Sublease Space
Big development markets such as NY, Dallas and DC may see more sublease vacancy; vacancies increased by 20 basis points in Q3. JLL does not anticipate volatile economic conditions—such as tentative interest rate hikes or uncertainties facing the election—will spur more sublease listings, but does predict sublease supply will move to new developments and impact peaking markets.
2. Rents Reach Their Apex
Rental prices are peaking in both high development and high tenant demand markets, and rental growth is anticipated to be very limited within the next 12 months, JLL projects. That may not apply to markets where premium-price supply is expected to deliver.
3. Tech Talent Shortage
Tech continues to drive the most leasing activity, spurring growth in both large and smaller markets. However, JLL points to a talent shortage that may cause some challenges, should employers begin hiring as new supply comes online in 2017.
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