Grubb & Ellis recently released a report on the office outlook for the third quarter of 2010, which suggests that while the nationwide office leasing market is no longer shrinking, recovery is still reticent. The report indicates that vacancy, absorption, rents and construction will languish until employers begin hiring more aggressively and the inventory of shadow space is filled. Other market indicators such as the average lease term and average lease size, both sitting at decade lows, confirm that tenants remain cautious despite the fire-sale bargains being offered by many landlords.
Other highlights include:
- Tenants absorbed 3.9 million square feet in the third quarter, the second consecutive quarter of low but positive net absorption.
- Developers delivered less than 1 million square feet of new space, making this the first quarter in three years that more space was absorbed than completed.
- The average Class A asking rental rate for space available at the end of the third quarter was $30.81 per square foot per year, full service – about flat compared with the second quarter and down by 1.0 percent from the third quarter of 2009.