The U.S. office space market absorbed 4.5 million square feet in the first quarter of 2011, indicating a steady, albeit modest, recovery for commercial real estate, according to Jones Lang LaSalle. Areas with strong energy and high-tech sectors, particularly Boston, Houston, Seattle, and the Silicon Valley, experienced the most activity in the first quarter.
"Renewed business confidence, strong corporate balance sheets, and near-record profit margins have led to substantial employment gains in recent months," said John Sikaitis, director of office research, Jones Lang LaSalle. "Employment in the professional and business service sector, which comprises the largest share of office-using employment, has more than tripled its gains in the overall employment markets in recent months, growing at an annual rate of just above 3 percent. We expect this to continue and get stronger throughout the year, which will lead to enhanced demand for office space in coming quarters."
The suburbs are also making a comeback. While suburban markets lagged behind their urban counterparts, demand and occupancy gains in suburbs matched those in Central Business Districts (CBDs) in the first quarter. This is another positive indication of overall recovery.
Key findings in Jones Lang LaSalle's U.S. office outlook for the first quarter include:
• Office-using employment growing at a 3 percent annual rate
• Major indicators of a recovering office market are growing, such as leasing activity and sale volume
• Baltimore, Boston, Houston, and Seattle each absorbed more than 500,000 square feet, net