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Reis: US office vacancy rate stayed flat in Q3

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Reis: US office vacancy rate stayed flat in Q3

U.S. office vacancies were essentially unchanged year over year in the third quarter at 16.8%, as occupancy growth remained steady and supply growth decelerated, according to Reis Inc.

Net absorption during the third quarter declined to approximately 4.5 million square feet from about 4.9 million square feet in the second quarter. New construction dropped to about 4.4 million square feet during the quarter from approximately 9.5 million square feet in the previous quarter.

"Office occupancy growth has been sluggish throughout this expansion as firms lease far fewer square feet per added job," Reis said.

Of the 79 metropolitan areas surveyed, 29 experienced vacancy growth during the third quarter mainly because of negative net absorption.

The national average asking and effective rents inched 0.6% higher quarter over quarter to $34.06 per square foot and $27.65 per square foot, respectively. The third-quarter asking and effective rents increased 2.6% on a year-over-year basis.

The metropolitan areas with the highest vacancy increases were Wichita, Kan.; Knoxville, Tenn.; Oklahoma City, Okla.; Tucson, Ariz.; and Palm Beach, Fla.; while the biggest declines were seen in Las Vegas; Columbia, S.C.; San Antonio; Austin, Texas; and New Haven, Conn.

Only 10 metros recorded an increase in effective rent of 1.0% or more, led by Los Angeles; San Francisco; Seattle; Austin, Texas; and San Diego. New York's office market continued to have the lowest vacancy decline in the U.S., down 0.2%, to 7.9% in the quarter, while its average effective rent rose 0.3% to $62.31 per square foot.

San Francisco logged an average effective rent of $53.76 per square foot and an effective rent growth of 1.4% in the third quarter.

The markets with the highest effective rent growth for the year include Austin; Los Angeles; Seattle; Raleigh-Durham, N.C.; and Tampa-St. Petersburg, Fla. Milwaukee; Hartford, Conn.; Little Rock, Ark.; Fairfield County, Conn.; and Rochester, N.Y., were among the markets with the weakest growth.