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Reis: US office vacancy rate ticks up slightly YOY in Q4'19

U.S. office vacancies in the fourth quarter of 2019 came in at 16.8%, slightly up from 16.7% in the same period of 2018, according to Reis Inc.

In the 2019 fourth quarter, net absorption jumped to 12,188,000 square feet from 10,069,000 square feet in the 2018 fourth quarter, with Chicago, New York and Dallas capturing exactly half of the positive net absorption in the quarter, while 21 metros logged negative net absorption in the period. For the full year 2019, net absorption came in at about 30.1 million square feet, up from 24.0 million square feet in 2018.

New construction in the 2019 fourth quarter dropped to 12,519,000 square feet from 14,711,000 square feet in the prior-year quarter.

The national average asking and effective rents per square foot for the quarter rose 2.6% and 2.7% year over year to $34.31 and $27.87, respectively.

Of the 79 metropolitan areas surveyed, 24 experienced vacancy growth during the 2019 fourth quarter, compared to 29 and 43 metropolitan areas, respectively, that experienced a vacancy rate increase in the 2019 third and second quarters.

New York City logged a slight increase in vacancy at 8.1%, with a flat average effective rent of $62.44 per square foot in the fourth quarter of 2019, up 2.8% over 2018. Chicago's vacancy rate dropped 0.2% to 17.5%, while its effective rent growth for the quarter was 0.4%.

According to Reis, 13 metros recorded an increase in rent of 1.0% or more, while six metros saw a small effective rent decline in the quarter.

Reis said there are concerns regarding the fate of embattled coworking giant WeWork Cos. Inc.'s occupancies as The We Co. unit had "over-expanded" and may have to review some of its office leases, potentially leading to an increase in vacancies in a few metros.

"Still, job growth should stay positive in 2020 and support continued occupancy growth in the office sector at a similarly tepid pace as in 2019," Reis added.