Q3 2016 U.S. Office Market Fundamentals Level Off but ... · U.S. Office Market Fundamentals Level...

U.S. Office Market Fundamentals Level Off but Remain PositiveMichael Roessle, National Director of Office Research

U.S. Research Report

OFFICE MARKET OUTLOOKQ3 2016

In Q3 2016, U.S. office market fundamentals continued the positive momentum of the first half of 2016, particularly in terms of net absorption amid renewed GDP growth. Robust office leasing in the third quarter should set the table for a solid year-end figure, as the fourth quarter has historically been strong for absorption. While the rate of occupancy gains is slowing as many businesses increasingly focus on efficiency, the U.S. office vacancy rate has a strong chance of matching or dipping below the prior cycle low by early 2017.

Key Observations

> U.S. GDP growth rebounded to 2.9 percent in the third quarter, marking the strongest quarter in two years. The U.S. economy added an average of 206,000 jobs per month in Q3 2016, up 41 percent from Q2 2016. Office-using jobs increased by 17 percent over the past quarter to an average of 75,000 per month.

> Class A asking rents ended the third quarter averaging $46.54 per square foot in central business districts (CBDs) and $28.91 in the suburbs. Both figures represent gains from Q3 2015 with the CBDs registering a 7.6 percent increase, compared to 3.3 percent in the suburbs. However, both areas registered slight decreases from Q2 2016, suggesting the pace of these gains is slowing.

> The national vacancy rate dropped to 12.4 percent, down 10 basis points (bps) from Q2 2016 and down 40 bps from Q3 2015. Compared to Q3 2015, 78 percent of metros registered stable or declining vacancies while 71 percent of metros recorded a quarterly decrease in vacancy. However, market conditions moderated in the core areas of the top 10 investment markets tracked by Colliers International.

> Net absorption reached 20.6 million square feet in Q3—nearly equal to the 23.8 million square feet absorbed in the first and second quarters combined. This level of net absorption easily surpassed the five-year quarterly average of 16.6 million square feet.

> Third quarter sales volume in the U.S. was down 4 percent from Q3 2015 to $33.9 billion, though the pace of decline is slowing from earlier in the year. While major and tertiary markets saw sales volume declines, secondary markets saw a 3 percent year-over-year increase.

Summary Statistics, Q3 2016 U.S. Office Market

Vacancy Rate 12.4% Change From Q2 2016 (Basis Points) -10

Absorption (MSF)

% of Markets with Positive Absorption

20.6

82%

New Supply (MSF) 12.2

Under Construction (MSF) 105.6

ASKING RENTS PER SQUARE FOOT PER YEAR

Downtown Class A $46.54 Change From Q2 2016 Change From Q3 2015

-0.1%+7.6%

Suburban Class A $28.91 Change From Q2 2016 Change From Q3 2015

-0.7%+3.3%

Market IndicatorsRelative to prior period Q3 2016

Q3 2017*

VACANCY

NET ABSORPTION

CONSTRUCTION

RENTAL RATE** *Projected **Rental rates for current quarter are for CBD; rent forecast is for metrowide rents.

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GDP and Employment Signal Renewed Economic Growth

U.S. GDP grew at 2.9 percent in Q3 2016, the fastest pace in two years and twice the rate of last quarter. Exports soared at an annualized rate of 10 percent, while public sector spending, private inventories and business spending all turned from negative to positive. On the other hand, consumption grew by a relatively tepid 2.1 percent in the quarter, almost half its 4.3 percent pace in the second quarter.

The U.S. economy continues to demonstrate resilience with a string of strong monthly job growth figures. According to the Bureau of Labor Statistics, September’s upwardly revised 191,000 job additions, following August’s 176,000 additions, marked a record six straight years of positive job growth, though the gains have been moderating as the economy nears its full employment level. The labor force participation rate also increased to 62.9 percent in September from 62.4 percent in Q3 2015, demonstrating rising worker confidence.

U.S. Job Growth Trends - 2 Month Moving Average

Source: Bureau of Labor Statistics

Despite core inflation still sitting below the Federal Reserve’s target rate of 2 percent, the signs of strength in the job market and renewed economic growth appear to reaffirm the belief that the Fed will hike interest rates this December for the first time since December 2015.

Office Absorption Reaches 2016 High

National office absorption rebounded from a slow first half of 2016 to reach 20.6 million square feet in Q3—nearly equal to the 23.8 million square feet absorbed in the first and second quarters combined. This bodes well for a strong finish to the year as tenants and landlords often push to complete deals before the new year. Still, limited space options and restrained construction activity will make matching the 80-90 million-square-feet annual totals for the past two years highly unlikely.

Absorption gains were widespread in the third quarter, with 82 percent of the markets we track recording a net gain. Suburban areas fueled the majority of those gains as there are much larger inventories in these areas than in the CBDs. As a result, suburban absorption accounted for 16.7 million square feet of the 20.6 million-square-foot total.

In addition, 89 percent of suburban markets recorded positive absorption compared with 68 percent of CBDs. However, this does not indicate that the trend toward urbanization is slowing. In fact, several major firms recently announced relocations from the suburbs to CBDs. Two prime examples are GE’s headquarters relocation from Stamford, CT to Boston and McDonald’s headquarters relocation from the Illinois suburb of Oak Brook to Chicago’s West Loop.

The tech sector, professional services sector and corporate relocations continue to fuel demand for office space. Suburban areas of Boston, Dallas, Seattle, Phoenix, South Florida and Nashville all posted absorption gains of at least 500,000 square feet. “New Tech” tenants, or those technology and e-commerce companies founded in the past 20 years, are responsible for an increasing share of absorption while more traditional sectors have been consolidating. For example, open source solutions provider Red Hat is opening a new facility in Boston’s Seaport submarket in an effort to tap into the area’s deep talent pool.

U.S. Office Market Q3 2014 - Q3 2016

Source: Colliers International

Jobs

0

5

10

15

20

25

30

35

10.0 %

10.5 %

11.0 %

11.5 %

12.0 %

12.5 %

13.0 %

13.5 %

14.0 %

14.5 %

Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

Mill

ions

SF

Vaca

ncy

%

New Supply (MSF) Absorption (MSF) Vacancy Rate (%)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16

Office-Using Employment Nonfarm Employment

Top U.S. Office Sales in Q3 2016

ADDRESS MARKET SF PRICE BUYER

1095 Sixth Ave* New York 1,116,129 $1,152,970,000 HKMA

11 Madison Ave* New York 2,285,043 $1,040,000,000 PGIM Real Estate

1221 Sixth Ave* New York 2,600,000 $1,035,000,000 Invesco Real Estate

10 Hudson Yards* New York 1,813,465 $946,000,000 Allianz Real Estate of America

10 Hudson Yards New York 694,000 $707,000,000 Related Companies

*Partial Interest Sale Source: Real Capital Analytics


YOY Change in CBD Class A Rent - 201 6Q3

$32.744.9%

$43.535.8%

$26.430.0%

$27.346.8%

$1 9.1 9-1 5.5%

$34.325.1 % $1 7.77

-3.3%

$73.591 3.8%

$20.48-2.5%

$41 .301 .2%

$35.1 66.5%

$45.50-0.3%

$59.291 1 .5%

$22.582.7%

$22.731 .2%

$28.663.8%

$23.27-4.5%

$74.415.7%

$30.596.5%

$24.731 3.5%

$57.671 .7%

$35.943.3%

$21 .700.0%

$26.9215.7%

$30.472.6%

$23.968.5%

$21 .262.7%

$24.265.7%

$1 6.26-5.9%

$22.048.1 %

$1 8.58-9.7%

$1 8.820.4%

$40.083.5%

$23.32-3.7% $27.1 1

3.8%

$25.384.4%

$21 .005.6%

$27.955.8%

$1 7.1 11 .2%

$1 8.473.6%

$33.608.3%

$1 9.442.5%

$21 .333.4%

$22.253.0%

$24.000.0%

$23.346.7%

$35.26-0.8%

$26.908.3%

$21 .222.5%

$41 .871 .2%

$50.901 4.0%

$26.976.3%

YOY Change in Rent-15.7% 15.7%

Top U.S. Office Leases in Q3 2016 TENANT ADDRESS MARKET SF TENANT

INDUSTRY

Coach, Inc. 10 Hudson Yards New York 694,000 Fashion

Google Moffett Gateway Silicon Valley 595,840 Technology

Random House, Inc.* 1745 Broadway New York 631,025 Publishing

Verizon* 600 Hidden Rdg Dallas 576,138 Communications

Allergan 5 Giralda FarmsNorthern New

Jersey431,493 Pharmaceutical

* Renewal Sources: CoStar, Colliers International

Class A Asking Rents Rise but Pace EasesClass A asking rents ended the third quarter averaging $46.54 per square foot in CBDs and $28.91 per square foot in the suburbs. Both figures represented gains from Q3 2015, with the CBDs registering a 7.6 percent increase, compared to 3.3 percent in the suburbs.

While 40 CBDs and 43 suburban areas posted quarterly increases in rents and annual gains in asking rent continue, CBD and suburban areas as a whole saw small quarterly declines that suggest the pace of gains is moderating. Of note, both the East Bay CBD (-3.3 percent) and San Francisco CBD (-3.6 percent) posted quarterly rent decreases, slowing the record-breaking gains seen over the past 18–24 months.

Suburban areas of Los Angeles, Portland, Seattle and the San Francisco Bay Area (particularly Silicon Valley and the Peninsula) led the west in annual rent growth, while the suburban areas of Nashville, Atlanta, Raleigh/Durham, Austin, Orlando and Dallas topped the southern markets.

Dallas serves as a good example of the influence that the growth of professional services and corporate relocations are having in some markets. These factors have pushed the Uptown submarket in Dallas to record-breaking highs in asking rent, with some top-tier buildings commanding a once unthinkable $50-$60 per square foot. Though these are records for Dallas, these rents are still lower than in many major markets around the country, helping to draw out-of-market relocations.

As asking rents rise, occupiers in many sectors have grown increasingly cost conscious. Many law firms are embracing more efficient workplace strategies. Other firms are relocating operations to lower-cost markets. For example, JPMorgan Chase & Co. and Toyota have consolidated in Dallas and Plano, respectively.

Yet relocations aren’t happening in all markets. In 2015, 39 percent of leases over 100,000 square feet in Manhattan were renewals. In 2016, that number has shot up to 59 percent, demonstrating a shift toward the lower cost option of renewing in-place rather than relocating.

YOY Change in CBD Class A Rent - Q3 2016


YOY Change in Metro Vacancy - 201 6Q3YOY Change in Metro Vacancy 201 6Q3

1 0.9%-0.8%

1 3.4%-1 .8%

1 1 .2%-0.7%

1 0.8%-2.0% 7.8%

-0.6%

1 6.3%-4.1 %

9.0%0.7%

5.0%-0.4%

1 0.7%-0.8%

1 3.0%-0.9%

1 8.0%-1 .3%

9.9%-1 .2%

9.9%-0.2%

1 5.2%-0.8%

1 1 .4%-0.7%

1 3.0%-2.6%

1 1 .1 %-2.0%

1 5.4%0.3%

8.2%-0.8%

1 4.4%0.5%

1 4.0%0.2%

1 1 .7%-0.4%

1 3.7%-0.6%

8.4%-0.9%

8.3%0.3%

1 0.2%-2.3%

1 2.7%-2.3%

9.8%-2.9%

1 4.9%-1 .6% 1 1 .0%

-1 .6%

7.5%0.0%

7.7%1 .0%

1 4.5%-0.8%

1 2.3%-0.3%

1 7.2%3.0%

1 3.5%-0.5%

1 1 .4%2.1 %

1 2.2%-1 .7%

1 1 .7%-0.7%

6.9%-1 .6%

9.0%-1 .0%

1 1 .6%-0.2%

1 1 .5%-0.3%1 0.5%

-0.9%

1 6.1 %0.4%

7.3%-2.1 %

1 2.1 %-3.3%

1 5.3%-3.1 %

8.2%-1 .0%

1 6.6%0.4%

1 3.9%0.0%

1 4.3%-0.9%

22.7%-0.5%

YOY Change in Vacancy-4.1% 4.1%

Suburban Occupancy Drives Down Vacancy Rates

At the close of the third quarter, just under 30 percent of the markets we track had a vacancy rate of less than 10 percent, while only the Dayton, OH market exceeded 20 percent.

The national office vacancy rate now stands at 12.4 percent, dropping 10 bps from mid-year 2016 and 40 bps from Q3 2015 on the strength of occupancy gains in suburban markets. Overall vacancy rates now stand just above the trough of 12.2 percent seen in the prior peak in Q3 2007, with a strong chance of matching that figure by year-end.

Impressively, 78 percent of the markets Colliers tracks posted stable or declining vacancies on an annual basis. In particular, strong secondary markets in the west and southeast continue to outperform the rest of the country. Phoenix, Tacoma, Denver, Tampa Bay and Orlando all saw vacancy rates drop between 200 and 410 bps on an annual basis. It should come as no surprise that Houston was not one of those markets. As energy markets continue to struggle to gain traction and a flood of sublease space saturates the market, Houston saw vacancy rise 300 bps on an annual basis.

Suburban markets saw strong vacancy declines, decreasing quarterly and annually by 30 bps and 60 bps, respectively. Meanwhile, occupancy gains in the CBD areas have moderated, as vacancies declined a mere 10 bps annually to 11.2 percent. Conditions were relatively weaker in the core areas of the top 10 investment markets tracked by Colliers, as vacancies increased in six of the 10 markets.

The Midwest region was the top performer for CBD areas, registering an annual vacancy decrease of 80 bps to end the third quarter at 11.9 percent. The downtown areas of Detroit, St. Louis, Kansas City, Dayton, Indianapolis and Columbus all enjoyed quarterly vacancy declines of between 90 and 530 bps. Strong local employment is the driver, with the Midwest unemployment rate falling to just 4.6 percent—the only region with a rate significantly lower than the overall U.S. unemployment rate of 5 percent.

As space constraints continue to be an issue in the CBDs, particularly for large blocks, many firms are looking to secondary markets and suburban areas as viable options for their expansion needs. Suburban occupancy gains were greatest in the west region, with vacancy decreasing by 110 bps year-over-year. Growth of the technology sector in primary and secondary markets also continues to be a major factor in driving down vacancy rates. Suburban areas of Phoenix, Denver, Las Vegas, Portland and the San Francisco Bay Area saw vacancy decreases varying from 40 bps to 450 bps, demonstrating widespread growth in the region.

YOY Change in Metro Vacancy - Q3 2016


Construction Activity Picks Up in Response to DemandConstruction has been restrained during this period of economic expansion, as many developers and lenders shied away from speculative projects. However, the pace is picking up. The 105.6 million square feet under construction at the end of the third quarter is the second-highest total since the peak of the prior cycle.

Quarterly Under Construction Totals

Source: Colliers International

Prudently, much of the construction is centered in metros where demand for new product is high and there is limited leftover supply from the recession. The top 10 markets in terms of office square footage under construction account for 56 percent of the U.S. total, showing that development is tightly focused on the areas where demand is greatest: markets such as Dallas, Manhattan, Silicon Valley, Seattle and Denver.

In many of these markets, projects are often between 50–80 percent pre-leased, giving tenants little relief from low vacancies, particularly for occupiers with large space requirements. Construction will have to rise to the levels of the prior peak (above 120 million square feet) before we begin to see any significant impact on vacancy.

Slowing Declines Suggest the Start of a Sales Volume Rebound

Transaction volume in the office sector fell 4 percent year-over-year during the third quarter to reach $33.9 billion, according to data from Real Capital Analytics. However, the trends point to an improvement as the pace of the declines earlier in the year is starting to slow.

Deal volume in secondary markets was up 3 percent annually to $13.8 billion, while major markets registered a decline of 4 percent to $18.3 billion. Volume in CBD areas posted a 10 percent decrease compared to Q3 2015 as investors appear to be waiting on the sidelines due to sub-4 percent cap rates for prime office properties in some gateway CBDs. Tertiary markets registered the sharpest annual decline in activity, down 29 percent. Though with only $1.7 billion in deal volume for the quarter, smaller shifts have a greater impact on percentage changes.

The U.S. property markets continue to attract overseas investors. Year-to-date cross-border investment in the office sector stands at $26 billion, a full 50 percent increase from the first three quarters of 2015. This year-over-year spread could rise further as the fourth quarter is generally the most active period for investment.

Canadian capital has historically been the most active overseas investment force in the U.S. office market. However, Canadian investment volume now lags behind levels from Europe, Asia and the Middle East—further proving that the U.S. is widely viewed as the safest option for investment capital as demand continues to rise.

Moderate Growth is the Name of the Game in Q4 2016So far this year, our relatively bullish 2016 outlook has largely taken form as expected. Economic growth has come in a bit below expectations but job additions remain steady. Both occupancy and asking rents have continued their growth, though at a more moderate pace than the record-setting past year.

We still see room for gains in many markets that have not yet matched or surpassed their prior troughs in vacancy. The fourth quarter should see the U.S. vacancy rate inch closer to, if not dip below, that prior trough. The technology sector, particularly “New Tech,” continues to unseat traditional industries like finance as a major driver of office activity across markets, whether seeking expansion opportunities for satellite offices or serving as the anchor tenant for new construction in core markets.

As we enter the time of year when investment and deal activity often accelerates, it’s important to consider that while gains may be slowing, the U.S. office market fundamentals remain positive. Though the financial market responded positively in the days immediately following the November election, it remains to be seen what the full impact will be. However, barring any unexpected exogenous shock to the economy, we see strong opportunities for occupiers and investors alike.

Cross-Border Investment in the U.S. Q3 2016

COUNTRY # OF PROPERTIES TOTAL VOLUME*

Germany 7 $1,917 Hong Kong 2 $1,527

Switzerland 85 $1,517

Norway 4 $969

Canada 20 $824

UK 7 $580

South Korea 2 $552

Japan 4 $546

Qatar 3 $403

Other 19 $968

* Volume in MillionsSource: Real Capital Analytics

0

20

40

60

80

100

120

140

Q3

2004

Q1

2005

Q3

2005

Q1

2006

Q3

2006

Q1

2007

Q3

2007

Q1

2008

Q3

2008

Q1

2009

Q3

2009

Q1

2010

Q3

2010

Q1

2011

Q3

2011

Q1

2012

Q3

2012

Q1

2013

Q3

2013

Q1

2014

Q3

2014

Q1

2015

Q3

2015

Q1

2016

Q3

2016

Mill

ions

Under Construction (SF)

Average 73.8MSF

http://www.colliers.com/en-us/us/insights/marketnews/tech-impact-report-sep-2016


Supplemental DataLandlord and Tenant Conditions (Largest 20 Markets)

Source: Colliers Q3 2016 office survey. Tenant-Landlord assessment reflects conditions as of Q3 2016.

$0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 $60.00Q3 2016 Average CBD Rent, All Classes ($/SF/Year)

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

Q3 20

16 CB

D Va

canc

y Rate

Median

Median

Los Angeles

Denver

Silicon Valley

Sacramento

Phoenix

East BayRaleigh/Durham

Orlando

Miami

Dallas

Atlanta

NYC Northern Suburbs

Washington, D.C.

Boston

Minneapolis-St. Paul

Cleveland

Chicago

Detroit

PortlandPhiladelphia

Leasing Market TrendRegionMidwestNortheastSouthWest

In favor of TenantEqual FootingIn favor of LandlordL

L

L

L

L

L

L

L

L

LL

L

LT

T

T

= =

==

L=T


Source: Colliers Q3 2016 office survey. Absorption forecasts reflect a 12-month outlook.

Supplemental Data (continued)Absorption Forecast (Largest 20 Markets)Expected Absorption Over Next 12 Months

1.0%

1.0%

-0.5%

0.5%

0.5%

0.0%

0.0%-0.5%

-1.0%

-1.0%

-1.5%

1.5% 2.0%

-2.0%

-2.5%

2.5% 3.0%

-3.0%

-3.5%

-4.0%

RegionMidwestNortheastSouthWest

Absorption ForecastPositive

NegativeClose to Zero

YoY C

hang

e in V

acanc

y Rate

YTD Absorption as % of Inventory (as of Q3-16)

DallasCleveland

Phoenix

Median

Median

Los Angeles

NYC Northern Suburbs

Atlanta

Sacramento

Minneapolis-St. Paul

Detroit

Denver

Miami

Washington, D.C.

Boston

Chicago

Orlando

Philadelphia

Portland

Silicon Valley

East Bay

Raleigh/Durham


United States - Downtown - All Classes

MARKET INVENTORY (SF) SEP 30, 2016

NEW SUPPLY Q3 2016 (SF)

UNDER CONSTRUCTION (SF)

VACANCY RATE JUN 30, 2016

VACANCY RATE SEP 30, 2016

ABSORPTION Q3 2016 (SF)

YTD ABSORPTION (SF) 2016

USA 1,909,804,581 1,794,216 42,034,248 11.2 % 11.2 % 3,892,718 7,305,842

NORTHEAST 862,200,017 523,519 17,733,908 10.2 % 10.4 % 2,757,672 1,186,919

Baltimore, MD 45,627,956 0 759,836 10.3 % 10.0 % 157,943 496,953

Boston, MA 65,467,834 425,000 1,375,000 10.3 % 11.0 % -110,256 -431,475

Hartford, CT 10,723,579 0 0 13.2 % 13.7 % -64,010 -230,058

New York City Metro 523,132,638 0 9,917,809 10.1 % 10.1 % 3,366,719 1,380,874

> Manhattan 506,126,142 0 9,917,809 9.9 % 10.0 % 3,293,810 1,581,061

• Downtown 104,384,942 0 2,861,402 12.2 % 11.7 % 4,174,946 4,843,024

• Midtown 236,122,551 0 2,668,790 10.5 % 10.6 % -320,566 -1,657,738

• Midtown South 165,618,649 0 4,387,617 7.5 % 7.9 % -560,570 -1,604,225

> NYC Northern Suburbs 17,006,496 0 0 15.6 % 15.9 % 72,909 -200,187

• Fairfield County, CT 10,477,342 0 0 16.8 % 16.8 % 75,778 -59,187

• Westchester County, NY 6,529,154 0 0 13.6 % 14.5 % -2,869 -141,000

Philadelphia, PA 42,533,373 0 1,546,054 10.1 % 9.6 % 216,776 221,147

Pittsburgh, PA 51,913,266 98,519 154,563 8.3 % 8.2 % 123,107 422,011

Washington, DC 122,801,371 0 3,980,646 11.5 % 12.1 % -932,607 -672,533

SOUTH 358,972,802 342,932 8,318,800 12.9 % 12.7 % 520,225 1,372,439

Atlanta, GA 50,473,441 0 699,873 14.4 % 14.0 % 170,133 365,681

Austin, TX 10,395,874 179,846 500,512 6.7 % 7.0 % 155,241 128,859

Birmingham, AL 5,056,317 0 0 15.8 % 14.2 % 42,235 72,938

Charleston, SC 2,422,148 0 87,500 5.8 % 4.8 % 23,584 37,848

Charlotte, NC 21,499,936 12,912 1,213,461 6.0 % 6.3 % -65,442 139,758

Columbia, SC 4,854,281 0 0 11.3 % 10.9 % 29,983 104,195

Dallas-Ft. Worth, TX 42,813,522 0 682,426 20.6 % 20.5 % 30,685 -710,644

> Dallas 32,208,933 0 401,937 23.6 % 23.4 % 72,101 -545,188

> Forth Worth 10,604,589 0 280,489 11.5 % 11.9 % -41,416 -165,456

Greenville, SC 3,582,131 0 193,000 14.1 % 10.2 % 131,441 162,187

Houston, TX 43,010,104 115,000 1,056,658 15.6 % 16.8 % -408,082 -163,716

Huntsville, AL 3,859,486 0 0 8.1 % 8.4 % 11,608 33,211

Jacksonville, FL 16,093,619 0 0 10.6 % 11.3 % -27,046 135,189

Memphis, TN 5,246,017 0 0 14.0 % 13.5 % 1,301 -29,431

Nashville, TN 12,505,169 0 2,030,000 9.6 % 8.3 % 78,571 103,983

Norfolk, VA 4,715,360 0 0 13.6 % 13.1 % 10,992 19,163

Orlando, FL 12,763,767 0 0 9.9 % 10.2 % -39,179 108,987

Raleigh/Durham, NC 12,270,383 0 701,000 4.9 % 4.8 % -7,238 42,930

Richmond, VA 16,136,051 0 323,624 11.3 % 9.1 % 40,744 -36,462

Savannah, GA 803,516 0 0 12.6 % 12.1 % 5,513 50,270

South Florida 80,557,191 35,174 830,746 12.3 % 11.6 % 301,222 769,084

> Fort Lauderdale 27,257,120 17,174 229,906 10.7 % 10.9 % 19,728 229,599

> Miami 31,535,714 18,000 576,271 13.5 % 12.4 % 146,935 205,621

> Palm Beach 21,764,357 0 24,569 12.4 % 11.4 % 134,559 333,864

Tampa Bay, FL 9,914,489 0 0 11.9 % 12.1 % 33,959 38,409

9 U.S. Research Report | Q3 2016 | Office Market Outlook | Colliers International9

United States - Downtown - All Classes








MIDWEST 378,139,488 398,533 4,885,371 12.2 % 11.9 % 332,763 2,588,540

Chicago, IL 160,013,418 0 3,900,030 11.3 % 10.6 % -72,829 -146,384

Cincinnati, OH 18,214,529 338,533 0 13.0 % 12.9 % 330,355 372,991

Cleveland, OH 19,985,163 0 0 18.0 % 17.9 % -69,376 -132,678

Columbus, OH 19,807,117 0 107,000 8.0 % 8.1 % -47,967 12,450

Dayton, OH 5,180,211 0 0 27.7 % 27.3 % 23,226 67,899

Detroit, MI 25,106,671 0 0 12.8 % 12.2 % 195,493 502,398

Indianapolis, IN 11,683,835 0 25,361 18.5 % 18.1 % 31,953 75,880

Kansas City, MO 33,708,974 0 166,650 10.4 % 9.8 % 193,771 204,714

Milwaukee, WI 19,500,491 0 110,000 10.1 % 10.3 % 88,426 275,486

Minneapolis-St. Paul 47,023,073 0 477,000 11.2 % 11.9 % -105,246 1,438,320

> Minneapolis CBD 36,027,734 0 477,000 11.7 % 13.1 % -205,652 1,187,745

> St. Paul CBD 10,995,339 0 0 9.4 % 7.9 % 100,406 250,575

Omaha, NE 6,336,363 0 0 6.2 % 11.2 % -317,118 -274,066

St. Louis, MO 11,579,643 60,000 99,330 21.5 % 20.9 % 82,075 191,530

WEST 310,492,274 529,232 11,096,169 10.8 % 10.9 % 282,058 2,157,944

Downtown Bakersfield, CA 3,433,336 0 0 7.2 % 7.1 % -72,850 -106,533

Denver, CO 35,037,393 0 2,530,678 11.7 % 11.9 % -90,976 -285,977

Fresno, CA 3,483,441 0 0 15.1 % 14.5 % 18,671 -36,384

Downtown Los Angeles, CA 32,235,300 0 1,990,600 17.7 % 18.2 % 45,000 289,100

Honolulu, HI 7,153,292 0 0 15.1 % 13.8 % 110,948 72,045

Las Vegas, NV 4,993,785 0 26,000 12.1 % 12.8 % -35,184 136,486

Phoenix, AZ 21,131,884 0 0 18.1 % 18.0 % 34,785 126,469

Portland, OR 25,307,681 0 452,884 10.0 % 9.8 % 43,878 212,072

Reno/Sparks, NV 3,994,512 0 0 10.6 % 10.5 % 4,088 84,781

Sacramento, CA 12,242,858 0 0 14.0 % 13.3 % 74,683 130,345

San Diego, CA 10,301,111 0 0 17.1 % 16.2 % 89,787 240,829

San Francisco Bay Area, CA 116,737,319 529,232 3,876,711 6.5 % 6.9 % -45,582 866,524

> East Bay 17,255,323 0 0 4.9 % 5.8 % -155,341 -402,420

> San Francisco 91,080,359 529,232 3,876,711 6.5 % 6.9 % 148,612 1,193,328

> Silicon Valley 8,401,637 0 0 10.0 % 9.5 % -38,853 75,616

Seattle, WA 26,190,080 0 1,913,296 10.0 % 9.8 % 91,265 409,499

Stockton, CA 8,250,282 0 306,000 11.1 % 11.0 % 13,545 18,688

(continued)


United States - Downtown - Class A


AVG ANNUAL QUOTED RENT (USD/SF)



ABSORPTION (SF) Q3 2016

QUARTERLY CHANGE IN RENT

ANNUAL CHANGE IN RENT

USA 1,074,703,601 $46.54 11.6 % 11.6 % 4,557,563 -0.06 % 7.60 %

NORTHEAST 549,781,128 $63.74 11.1 % 11.1 % 3,817,256 0.30 % 6.38 %

Baltimore, MD 16,002,390 $24.73 11.2 % 10.8 % 62,602 2.05 % 13.55 %

Boston, MA 46,250,515 $59.29 10.8 % 11.7 % -42,505 2.15 % 11.48 %

Hartford, CT 7,415,680 $22.58 15.3 % 15.9 % -45,804 0.36 % 2.68 %

New York, NY 336,265,994 $74.41 11.2 % 11.2 % 3,694,201 0.47 % 5.70 %

> Manhattan 323,242,521 $78.04 11.0 % 11.0 % 3,636,911 0.56 % 5.84 %

• Downtown 79,469,698 $60.89 13.8 % 13.2 % 4,062,069 0.32 % 1.44 %

• Midtown 203,429,082 $86.29 10.8 % 10.9 % -263,580 0.03 % 3.86 %

• Midtown South 40,343,741 $79.54 6.4 % 6.8 % -161,578 0.73 % 9.06 %

> NYC Northern Suburbs 13,023,473 $43.28 16.3 % 16.8 % 57,290 -0.19 % -0.63 %

• Fairfield County, CT 9,069,460 $45.95 16.5 % 16.6 % 68,229 -0.41 % -0.26 %

• Westchester County, NY 3,954,013 $34.86 15.6 % 17.1 % -10,939 0.93 % 1.99 %

Philadelphia, PA 30,314,537 $30.59 9.6 % 9.1 % 161,550 2.88 % 6.49 %

Pittsburgh, PA 22,864,221 $27.11 8.2 % 8.2 % 76,709 1.38 % 3.76 %

Washington, DC - District of Columbia 90,667,791 $57.67 11.7 % 11.7 % -89,497 0.21 % 1.71 %

SOUTH 192,824,189 $30.96 13.6 % 13.7 % 59,750 -0.10 % 6.26 %

Atlanta, GA 30,907,773 $26.97 15.3 % 14.8 % 173,836 1.54 % 6.27 %

Austin, TX 6,983,856 $50.90 7.0 % 7.2 % 166,673 12.44 % 14.05 %

Birmingham, AL 3,939,806 $18.58 10.0 % 9.7 % 12,155 -8.02 % -9.72 %

Charleston, SC 950,039 $35.94 5.6 % 5.9 % -2,739 -0.77 % 3.31 %

Charlotte, NC 15,419,771 $30.47 5.7 % 6.5 % -113,448 1.50 % 2.56 %

Columbia, SC 2,324,922 $23.96 13.7 % 12.0 % 38,592 2.02 % 8.53 %

Dallas-Ft. Worth, TX 28,878,361 $26.90 23.7 % 23.7 % -1,876 0.20 % 8.35 %

> Dallas 22,964,115 $26.64 26.1 % 26.1 % 9,171 0.30 % 9.27 %

> Forth Worth 5,914,246 $29.12 14.5 % 14.7 % -11,047 -0.27 % 1.68 %

Greenville, SC 2,310,167 $26.92 15.3 % 10.0 % 122,302 2.43 % 15.67 %

Houston, TX 31,571,839 $45.50 11.8 % 13.4 % -412,324 1.36 % -0.28 %

Huntsville, AL 890,757 $19.19 6.9 % 6.9 % 949 -20.90 % -15.47 %

Jacksonville, FL 7,524,530 $21.33 10.1 % 11.4 % -31,480 0.25 % 3.44 %

Memphis, TN 1,971,211 $18.47 20.4 % 20.0 % 1,005 0.82 % 3.65 %

Nashville, TN 4,648,442 $27.95 9.9 % 8.7 % 28,745 0.40 % 5.79 %

Norfolk, VA 2,328,115 $22.73 11.9 % 11.0 % -3,637 7.47 % 1.25 %

Orlando, FL 5,798,966 $26.43 10.6 % 11.7 % -53,991 0.99 % 0.00 %

Raleigh/Durham, NC 6,812,575 $28.66 6.7 % 6.5 % 6,150 2.35 % 3.82 %

Richmond, VA 6,972,914 $23.27 11.9 % 12.4 % -4,991 -1.06 % -4.47 %

Savannah, GA 645,713 $21.70 9.3 % 9.1 % 3,103 0.00 % 0.00 %

South Florida 25,327,991 $40.08 14.6 % 14.3 % 102,405 1.53 % 3.46 %

> Fort Lauderdale 6,282,293 $34.09 13.2 % 13.8 % -14,124 4.23 % 4.69 %

> Miami 12,885,623 $44.74 15.8 % 15.0 % 99,167 0.92 % 4.48 %

> Palm Beach 6,160,075 $35.23 13.7 % 13.3 % 17,362 2.13 % 0.79 %

Tampa Bay, FL 6,616,441 $27.34 11.8 % 11.1 % 28,321 2.03 % 6.84 %


United States - Downtown - Class A


AVG ANNUAL QUOTED RENT (USD/SF)






MIDWEST 151,150,646 $26.72 12.6 % 12.1 % 601,941 -5.93 % -5.42 %

Chicago, IL 63,101,526 $41.87 11.2 % 10.9 % 253,832 -0.69 % 1.22 %

Cincinnati, OH 8,137,243 $24.26 13.4 % 12.8 % 356,808 3.12 % 5.70 %

Cleveland, OH 9,831,957 $21.26 17.0 % 16.2 % -7,191 0.57 % 2.72 %

Columbus, OH 9,056,062 $21.22 10.2 % 10.9 % -60,154 4.17 % 2.51 %

Dayton, OH 2,369,290 $16.26 26.4 % 25.6 % 18,300 0.00 % -5.91 %

Detroit, MI 7,276,729 $23.34 12.8 % 4.4 % 6,201 12.10 % 6.67 %

Indianapolis, IN 6,080,832 $22.25 19.7 % 19.2 % 35,400 0.14 % 2.96 %

Kansas City, MO 10,834,802 $19.44 12.8 % 13.2 % 16,138 0.57 % 2.52 %

Milwaukee, WI 5,818,531 $22.04 16.1 % 17.0 % 54,863 13.16 % 8.05 %

Minneapolis-St. Paul 19,937,202 $17.11 11.1 % 11.3 % -66,131 1.04 % 1.16 %

> Minneapolis 17,163,242 $17.88 11.5 % 11.6 % -36,857 1.42 % 3.41 %

> St. Paul CBD 2,773,960 $13.65 8.2 % 9.3 % -29,274 0.00 % -4.68 %

Omaha, NE 3,515,362 $21.00 5.3 % 7.1 % -62,515 0.24 % 5.58 %

St. Louis, MO 5,191,110 $18.82 16.0 % 15.8 % 56,390 0.37 % 0.43 %

WEST 180,947,638 $47.48 10.3 % 10.3 % 78,616 2.49 % 16.04 %

Downtown Bakersfield, CA 788,282 $20.48 7.1 % 5.8 % 10,221 -2.48 % -2.48 %

Denver, CO 22,270,250 $35.26 13.5 % 13.2 % 71,491 -1.01 % -0.84 %

Fresno, CA 1,089,103 $24.00 8.6 % 7.7 % 10,050 0.00 % 0.00 %

Downtown Los Angeles, CA 18,098,000 $41.30 15.6 % 15.4 % 22,400 0.55 % 1.16 %

Honolulu, HI 4,966,720 $35.40 15.4 % 13.7 % 85,094 0.00 % -1.13 %

Las Vegas, NV 1,232,341 $33.60 15.9 % 19.5 % -44,176 5.26 % 8.29 %

Phoenix, AZ 9,467,087 $25.38 19.9 % 19.0 % 91,486 2.39 % 4.42 %

Portland, OR 12,006,312 $32.74 10.5 % 10.2 % 33,972 0.92 % 4.90 %

Reno/Sparks, NV 779,707 $23.32 12.1 % 12.8 % -5,427 -4.54 % -3.72 %

Sacramento, CA 5,369,452 $34.32 12.7 % 12.8 % -11,278 -0.35 % 5.15 %

San Diego, CA 7,577,266 $35.16 12.8 % 11.6 % 87,451 3.90 % 6.55 %

San Francisco Bay Area, CA 73,490,501 $73.59 5.9 % 6.4 % -347,190 -2.21 % 13.85 %

> East Bay 10,562,055 $50.76 2.9 % 2.8 % 11,419 -3.28 % 21.02 %

> San Francisco 59,122,564 $77.54 6.2 % 6.7 % -302,377 -3.59 % 8.45 %

> Silicon Valley 3,805,882 $42.30 9.9 % 11.2 % -56,232 1.75 % 3.93 %

Seattle, WA 20,981,652 $43.53 9.7 % 9.4 % 67,191 1.75 % 5.78 %

Stockton, CA 2,830,965 $17.77 15.4 % 15.1 % 7,331 0.39 % -3.30 %

(continued)


United States - Suburban - All Classes








USA 4,080,783,054 10,438,070 63,543,552 13.2 % 12.9 % 16,740,172 36,825,512

NORTHEAST 1,065,908,772 3,256,743 9,958,939 14.4 % 14.1 % 5,071,956 6,565,439

Baltimore, MD 76,202,795 177,480 1,309,746 10.9 % 10.9 % 29,494 647,550

Boston, MA 126,507,406 1,955,963 2,259,533 15.2 % 14.8 % 1,849,640 1,950,804

Hartford, CT 32,016,302 0 0 10.7 % 10.6 % -56,320 47,364

New Hampshire Markets 17,685,703 0 70,000 12.5 % 12.2 % 54,801 232,527

New York City Metro 350,562,324 856,500 1,107,740 14.3 % 13.8 % 2,542,781 3,141,517

> Central New Jersey 86,334,215 671,500 111,759 13.9 % 13.1 % 1,294,900 1,735,855

> Long Island 75,443,237 0 639,981 8.4 % 8.1 % 232,224 551,815

> Northern New Jersey 121,039,224 185,000 310,000 17.8 % 17.2 % 550,507 -114,004

> NYC Northern Suburbs 67,745,648 0 46,000 15.2 % 15.3 % 465,150 967,851

Philadelphia, PA 103,226,463 0 579,918 12.4 % 12.3 % 115,216 712,516

Pittsburgh, PA 72,501,979 0 234,991 7.9 % 7.5 % 304,470 883,138

Washington, DC 287,205,800 266,800 4,397,011 17.9 % 17.8 % 231,874 -1,049,977

SOUTH 1,276,203,498 3,831,884 23,845,628 12.7 % 12.6 % 4,696,653 11,670,645

Atlanta, GA 169,488,076 255,811 3,207,163 13.5 % 13.6 % 124,134 265,607

Austin, TX 39,303,335 79,634 502,649 13.2 % 12.9 % 170,832 471,383

Birmingham, AL 13,932,994 0 0 13.2 % 13.9 % -61,645 -39,579

Charleston, SC 9,890,718 0 323,000 9.5 % 7.9 % 179,471 167,727

Charlotte, NC 64,606,520 125,619 1,968,316 9.0 % 8.9 % 206,074 1,097,098

Columbia, SC 4,936,843 0 0 21.7 % 22.2 % 13,228 19,607

Dallas-Ft. Worth, TX 276,130,785 1,521,399 10,730,624 14.7 % 14.6 % 1,573,295 3,298,699

> Dallas 252,648,421 1,297,260 10,533,402 14.8 % 14.7 % 1,417,130 3,003,714

> Forth Worth 23,482,364 224,139 197,222 14.1 % 14.3 % 156,165 294,985

Greenville, SC 6,428,775 0 0 17.9 % 18.1 % 12,999 237,034

Houston, TX 187,575,743 1,439,315 1,100,557 16.6 % 17.3 % 3,793 577,344

Huntsville, AL 18,750,535 12.5 % 10.1 % 103,525 219,661

Jacksonville, FL 46,599,550 167,425 98,752 9.0 % 9.4 % 415,162 1,004,895

Memphis, TN 28,133,370 51,886 895,000 12.6 % 12.9 % -46,412 -125,644

Nashville, TN 35,604,894 0 1,165,000 3.3 % 3.8 % 506,573 709,406

Norfolk, VA 34,720,846 0 0 11.3 % 11.5 % 147,272 228,873

Orlando, FL 55,255,040 121,000 456,288 10.7 % 10.2 % 331,840 1,178,873

Raleigh/Durham, NC 72,556,545 26,000 1,409,937 9.3 % 7.2 % 411,444 129,450

Richmond, VA 37,001,243 0 214,760 8.7 % 8.9 % -25,564 -32,278

Savannah, GA 1,394,498 0 0 13.3 % 12.1 % 18,764 17,858

South Florida 118,359,755 43,795 1,773,582 11.2 % 10.9 % 555,069 1,549,346

> Fort Lauderdale 31,978,636 11,613 646,793 12.0 % 11.6 % 170,654 635,727

> Miami 59,497,312 0 1,091,429 9.4 % 9.5 % 94,790 456,090

> Palm Beach 26,883,807 32,182 35,360 14.5 % 13.2 % 289,625 457,529

Tampa Bay, FL 55,533,433 0 0 13.1 % 12.8 % 56,799 695,285


United States - Suburban - All Classes








MIDWEST 704,157,661 1,467,498 4,846,772 13.2 % 13.2 % 2,621,524 6,394,559

Chicago, IL 157,968,062 73,800 0 18.5 % 18.3 % -1,152,319 -2,305,061

Cincinnati, OH 45,498,588 75,000 774,644 15.7 % 14.8 % 461,868 1,083,986

Cleveland, OH 54,461,806 711,000 122,500 11.9 % 12.4 % 541,781 708,531

Columbus, OH 45,026,646 144,000 595,455 8.5 % 8.2 % 89,201 283,028

Dayton, OH 9,252,833 0 131,600 20.7 % 20.1 % 43,861 52,010

Detroit, MI 140,049,278 210,698 660,734 12.6 % 13.1 % 2,043,304 4,615,369

Indianapolis, IN 25,751,740 163,000 442,886 13.6 % 13.8 % 3,675 260,876

Kansas City, MO 60,060,934 90,000 1,114,963 10.0 % 10.0 % 212,420 835,197

Milwaukee, WI 25,891,741 0 0 11.4 % 11.3 % 62,296 358,267

Minneapolis-St. Paul 81,920,590 0 436,500 11.2 % 10.1 % 16,969 -165,395

Omaha, NE 21,474,699 0 220,317 9.3 % 8.3 % 277,202 325,496

St. Louis, MO 36,800,744 0 347,173 11.2 % 11.0 % 21,266 342,255

WEST 1,034,513,123 1,881,945 24,892,213 12.4 % 11.9 % 4,350,039 12,194,869

Bakersfield, CA 6,334,937 0 71,000 8.0 % 8.0 % 5,140 -5,306

Denver, CO 106,755,864 98,980 1,980,685 11.0 % 10.8 % -63,802 1,026,712

Fresno, CA 18,534,932 0 0 10.9 % 10.8 % 54,297 291,881

Greater Los Angeles, CA 271,097,182 200,267 3,314,500 14.6 % 14.0 % 1,182,200 2,444,000

> Inland Empire 20,457,792 0 25,000 16.0 % 15.2 % 166,200 120,100

> Los Angeles 167,875,066 200,267 2,116,100 15.3 % 14.9 % 526,200 1,502,000

> Orange County 82,764,324 0 1,173,400 13.0 % 11.8 % 489,800 821,900

Honolulu, HI 7,496,373 0 0 11.4 % 11.0 % 24,527 41,544

Las Vegas, NV 38,924,438 0 176,003 18.1 % 18.7 % 199,129 622,844

Phoenix, AZ 119,668,384 473,314 1,861,610 16.5 % 16.0 % 899,162 2,256,722

Portland, CA 56,066,286 117,500 1,087,789 7.9 % 7.7 % 255,382 1,108,593

Reno/Sparks, NV 7,208,833 0 0 11.5 % 11.0 % 40,965 20,615

Sacramento, CA 56,652,598 35,000 0 16.5 % 15.2 % 266,578 74,456

San Diego, CA 74,195,523 0 260,797 11.9 % 11.7 % 194,693 703,390

San Francisco Bay Area, CA 163,425,167 255,694 10,442,051 8.4 % 7.8 % 313,732 1,895,168

> East Bay 43,301,324 0 410,000 10.7 % 9.7 % 397,094 1,046,641

> Fairfield, CA 5,055,655 0 0 17.3 % 17.6 % -16,619 49,120

> San Francisco Peninsula 41,066,027 0 1,008,906 6.8 % 6.7 % -715,751 -135,775

> Silicon Valley 74,002,161 255,694 9,023,145 7.4 % 6.7 % 649,008 935,182

Seattle/Puget Sound, WA 108,152,606 701,190 5,697,778 8.4 % 7.9 % 978,036 1,714,250

> Bellevue 38,071,591 0 1,570,245 7.7 % 6.9 % 262,508 791,780

> Everett 10,921,038 0 0 9.3 % 8.5 % 64,633 128,959

> Seattle 36,843,458 701,190 3,081,886 6.6 % 6.9 % 569,802 635,575

> Tacoma 22,316,519 0 1,045,647 12.4 % 10.9 % 81,093 157,936

(continued)


United States - Suburban - Class A


AVG ANNUAL QUOTED RENT

(USD/SF)






USA 1,625,635,519 $28.91 13.4 % 13.1 % 10,519,882 -0.66 % 3.34 %

NORTHEAST 522,202,604 $29.31 14.6 % 14.1 % 4,896,720 0.16 % 1.32 %

Baltimore, MD 30,157,410 $26.04 9.7 % 9.2 % 129,963 1.16 % 5.08 %

Boston, MA 61,672,752 $27.37 13.3 % 12.9 % 1,677,533 3.35 % 2.32 %

Hartford, CT 5,725,827 $22.04 24.1 % 24.4 % -18,143 -1.78 % 0.13 %

New Hampshire Markets 9,362,948 $19.20 13.2 % 13.4 % -21,168 -0.41 % 6.48 %

New York City Metro 207,733,349 $29.75 14.0 % 13.4 % 2,128,230 0.22 % 1.39 %

> Central New Jersey 59,967,464 $27.23 12.8 % 12.0 % 1,075,620 1.10 % 6.18 %

> Long Island 24,939,028 $31.02 8.5 % 7.8 % 180,779 1.43 % -1.69 %

> Northern New Jersey 87,932,933 $29.58 16.2 % 15.8 % 490,412 -0.58 % 2.52 %

> NYC Northern Suburbs 34,893,924 $33.63 14.4 % 14.0 % 381,419 -0.75 % -3.31 %

Philadelphia, PA 52,584,270 $27.13 9.1 % 8.9 % 114,905 1.13 % 1.65 %

Pittsburgh, PA 13,250,774 $22.65 14.4 % 13.3 % 141,940 0.47 % 1.36 %

Washington, DC 141,715,274 $32.63 18.8 % 18.4 % 743,460 -1.16 % 0.64 %

SOUTH 512,670,134 $28.18 13.1 % 13.1 % 3,620,710 -1.34 % 4.47 %

Atlanta, GA 82,420,680 $27.41 12.0 % 12.0 % 173,877 1.71 % 6.44 %

Austin, TX 19,791,399 $34.30 13.6 % 13.6 % 40,814 3.96 % 5.47 %

Birmingham, AL 8,462,097 $18.60 11.3 % 12.1 % -55,678 -12.91 % -14.00 %

Charleston, SC 3,407,799 $26.07 10.6 % 6.9 % 250,380 -0.87 % 1.41 %

Charlotte, NC 22,938,875 $25.49 10.3 % 10.5 % -13,702 -0.50 % 5.01 %

Columbia, SC 1,001,972 $18.14 10.2 % 12.6 % -24,108 -1.13 % 3.11 %

Dallas-Ft. Worth, TX 113,394,164 $28.89 15.5 % 14.9 % 1,695,903 0.92 % 5.15 %

> Dallas 108,945,923 $28.98 15.6 % 14.9 % 1,602,871 0.87 % 5.31 %

> Forth Worth 4,448,241 $26.38 13.6 % 14.8 % 93,032 2.31 % 1.44 %

Greenville, SC 3,106,961 $21.11 10.3 % 8.0 % 71,678 0.13 % 7.59 %

Houston, TX 95,782,090 $32.91 18.5 % 19.1 % 565,175 -0.60 % -2.73 %

Huntsville, AL 4,005,114 $19.36 5.1 % 3.2 % 569 -2.04 % 1.59 %

Jacksonville, FL 9,584,978 $22.28 7.9 % 10.0 % 13,983 1.89 % 4.91 %

Memphis, TN 8,559,051 $20.25 6.4 % 6.2 % 24,720 0.72 % -2.54 %

Nashville, TN 15,697,101 $26.31 2.1 % 2.6 % 377,207 2.20 % 7.93 %

Norfolk, VA 11,131,516 $19.59 9.3 % 12.2 % -14,517 -0.52 % -4.78 %

Orlando, FL 19,261,994 $23.33 10.3 % 9.8 % 188,873 3.76 % 5.29 %

Raleigh/Durham, NC 28,304,157 $24.28 8.7 % 7.9 % 261,501 -0.12 % 5.71 %

Richmond, VA 14,110,961 $19.22 8.8 % 9.8 % -138,287 -0.35 % 1.38 %

Savannah, GA 462,344 $22.42 9.5 % 10.0 % 7,114 -0.86 % 1.99 %

South Florida 33,436,627 $33.04 13.8 % 13.6 % 279,335 -0.33 % 3.85 %

> Fort Lauderdale 10,288,036 $29.71 14.3 % 13.9 % 61,931 0.99 % 1.26 %

> Miami 14,648,943 $36.63 12.1 % 11.8 % 37,249 1.36 % 6.03 %

> Palm Beach 8,499,648 $31.55 16.6 % 16.2 % 180,155 -5.28 % 0.93 %

Tampa Bay, FL 17,810,254 $25.11 10.5 % 11.0 % -84,127 -0.74 % 3.20 %


United States - Suburban - Class A


AVG ANNUAL QUOTED RENT

(USD/SF)






MIDWEST 257,392,009 $23.70 13.8 % 13.8 % -93,982 0.60 % 3.62 %

Chicago, IL 81,881,268 $28.00 21.0 % 20.0 % -1,195,568 0.40 % 2.11 %

Cincinnati, OH 17,706,821 $21.87 15.4 % 14.6 % 197,152 1.04 % 2.95 %

Cleveland, OH 10,355,444 $20.47 9.8 % 10.6 % 541,035 1.85 % 1.68 %

Columbus, OH 19,274,502 $20.77 7.1 % 7.2 % -7,887 1.48 % 4.52 %

Dayton, OH 2,220,911 $19.96 25.0 % 24.5 % 4,428 -3.32 % -4.67 %

Detroit, MI 37,289,378 $21.72 10.9 % 11.9 % 310,032 -0.32 % 3.18 %

Indianapolis, IN 11,983,240 $20.75 12.9 % 13.4 % 26,413 -0.41 % 3.78 %

Kansas City, MO 18,045,176 $21.34 9.3 % 9.7 % -8,079 -1.33 % 0.67 %

Milwaukee, WI 8,748,080 $13.66 10.6 % 11.4 % -25,795 1.28 % 3.44 %

Minneapolis-St. Paul 27,570,144 $16.38 13.4 % 11.0 % 19,131 3.39 % 5.96 %

Omaha, NE 5,538,665 $28.32 3.6 % 3.4 % 51,375 2.54 % 2.97 %

St. Louis, MO 16,778,380 $23.30 9.3 % 9.1 % -6,219 -1.45 % 0.04 %

WEST 333,370,772 $35.66 11.7 % 11.1 % 2,096,434 0.33 % 5.76 %

Bakersfield, CA 2,924,775 $21.79 11.2 % 11.8 % -17,831 -4.29 % 0 %

Denver, CO 39,354,392 $26.93 9.0 % 9.6 % -173,852 0.39 % 1.39 %

Fresno, CA 1,578,895 $26.44 13.1 % 12.9 % -974 -2.45 % -0.25 %

Greater Los Angeles< CA 61,619,182 $35.37 14.4 % 13.4 % 358,900 0.29 % 10.22 %

> Los Angeles 27,445,600 $36.20 14.8 % 14.7 % 37,200 0.06 % 7.71 %

> Orange County 34,173,582 $34.35 14.0 % 12.4 % 321,700 0.76 % 11.02 %

Las Vegas, NV 5,246,313 $31.76 22.9 % 24.1 % -38,169 -0.11 % -0.05 %

Phoenix, AZ 36,830,109 $28.33 15.9 % 14.9 % 682,695 0.33 % 5.05 %

Portland, OR 14,204,588 $27.62 9.6 % 9.0 % 106,275 4.65 % 8.72 %

Reno/Sparks, NV 847,224 $20.95 10.7 % 10.1 % 5,090 0.29 % 1.33 %

Sacramento, CA 15,324,256 $23.30 14.5 % 13.4 % 57,216 0.36 % 1.87 %

San Diego, CA 25,057,781 $39.20 13.5 % 12.9 % 106,046 -0.66 % -2.90 %

San Francisco Bay Area, CA 86,469,364 $46.07 9.4 % 8.4 % 443,060 0.07 % 4.72 %

> East Bay 19,188,664 $35.11 11.4 % 9.6 % 341,627 2.11 % 4.83 %

> Fairfield, CA 1,963,219 $26.39 15.3 % 15.9 % -11,903 0.94 % 3.36 %

> San Francisco Peninsula 23,950,588 $56.06 7.7 % 7.7 % -559,874 3.17 % 7.50 %

> Silicon Valley 41,366,893 $50.49 9.1 % 8.0 % 673,210 -4.67 % 4.89 %

Seattle/Puget Sound, WA 43,913,893 $40.19 8.8 % 8.6 % 567,978 5.96 % 5.61 %

> Bellevue 19,150,332 $41.00 8.2 % 7.7 % 92,038 1.94 % 6.20 %

> Everett 1,461,153 $27.03 17.7 % 15.7 % 29,112 1.00 % 1.38 %

> Seattle 16,998,665 $40.71 5.6 % 6.6 % 489,036 2.37 % 0.98 %

> Tacoma 6,303,743 $40.72 18.0 % 14.8 % -42,208 24.86 % 56.60 %

(continued)

16 North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International

Copyright © 2016 Colliers International.The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

Colliers International666 Fifth Avenue New York, NY 10103+1 212 716 3500colliers.com

United States | Office Investment

MARKETCBD

SALES PRICE (USD PSF)

CBD CAP RATE

SUBURBAN SALES PRICE

(USD PSF)

SUBURBAN CAP RATE

USA $379 5.6% $196 6.8%NORTHEAST $696 5.0% $163 7.0%Baltimore Metropolitan Area $103 $188 Boston $609 4.8% $246 6.4%Hartford $105 8.0% $141 8.5%New York City Metro $762 5.0% $135 7.1%Philadelphia $179 7.0% $170 7.3%Washington, DC $454 5.3% $192 6.1%SOUTH $233 6.4% $177 7.3%Atlanta $243 6.7% $152 7.3%Austin $466 5.4% $255 6.6%Birmingham $148 8.5%Charlotte $235 $195 7.0%Dallas-Ft. Worth $202 4.5% $176 7.1%Houston $135 $252 7.6%Huntsville 8.0%Jacksonville $105 Memphis $148 Nashville $144 6.0% $205 7.3%Norfolk $125 7.8% $132 8.0%Orlando $240 6.7% $161 7.8%Raleigh/Durham $322 7.6% $157 6.6%Richmond $181 7.8% $113 8.3%Savannah $160 8.5% $180 8.5%South Florida $359 6.3% $204 6.6%Tampa Bay $184 $141 8.0%MIDWEST $180 6.8% $123 7.5%Chicago $229 6.2% $134 7.1%Cincinnati $43 $120 7.3%Cleveland $71 $8 $100 8.5%Columbus $87 8.5%Dayton $127 8.1%Detroit $128 7.9%Indianapolis $137 8.1% $101 8.3%Kansas City $113 Milwaukee $110 8.2% $114 7.4%Minneapolis-St. Paul $165 $102 7.6%St. Louis, MO $95 $125 6.7%WEST $425 5.1% $264 6.3%Denver $268 5.0% $201 6.6%Fresno $240 7.3% $260 6.8%Greater Los Angeles $302 4.5% $333 5.9%Phoenix $148 6.9%Portland $288 5.0% $168 6.5%Sacramento $204 6.0% $138 6.5%San Diego $242 $273 6.5%San Francisco Bay Area $542 4.9% $337 5.7%Seattle/Puget Sound $534 4.7% $238 6.9%

Sources: Colliers International, Real Capital Analytics

OFFICE SERVICES | contactCynthia Foster

President, National Office Services | USA

+1 212 716 [email protected]

FOR MORE INFORMATIONMichael Roessle

National Director of Office Research | USA+1 212 716 3699

[email protected]

Pete Culliney Director of Research | Global

+1 212 716 3689 [email protected]

CONTRIBUTORJeff Simonson

Senior Research Analyst | USA+1 760 930 7941

[email protected]

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