According to recent CoStar Group and PPR reports the Office Market in 2012 performed as expected… Office jobs increased 2.1%, the same as in 2011. Office sales were up 8% and the price of buying an office building increased 4.8%. Due to the correlation between job growth and demand for office space they compare the growth of employment in Total Non-Farm Employment to Office Using Employment, and the Office Use job growth was 1% more than the total non-farm job growth. Office Vacancy fell 50 basis points to 12.3%. Construction starts for Office are way down…Therefore the prediction is that 2013 will be similar to 2012 for the office market with some slow growth in demand and increases in rents. Of course these numbers are references to a National picture. Each region has different growth patterns depending on the local economy. The changes in rental rates year over year (2011/2012) provides an example of the differences. In San Francisco the year over year change in office rents was an increase of 14.6%; in the Philadelphia Region that change was 0.1%, and in Saint Louis a decrease of 1.6%. In most areas demand is increasing although slowly, construction is down, and rental rates are increasing.
For companies that use office space it is important to know you are striking the most reasonable and fair terms of a lease or lease renewal. As the office market cost increase in 2013, and beyond, good market intelligence, excellent insights into the local Office Market, and efficient design of the office are key to obtain the best possible terms of a lease.
PG Commercial Real Estate, Inc. | ITRA Global Philadelphia