Net absorption surges to highest level since 2015
- Net absorption in Q2 more than doubled quarter-over-quarter and year-over-year to 15.5 million sq. ft.—the highest total since Q4 2015. More than three-quarters of the markets tracked by CBRE Research registered positive absorption in Q2, up from 65% of markets in Q1. San Jose, San Francisco and Washington, D.C. were the top markets for net absorption in both Q2 and the first half of the year.
- Construction completions exceeded 10 million sq. ft. for the eighth consecutive quarter, but slowed slightly from the previous two quarters to 11.1 million sq. ft. Nearly 60% of the space delivered in the markets tracked by CBRE Research was preleased, reflecting strong tenant demand for high-quality space.
- The vacancy rate decreased for the first time in four quarters, falling by 10 basis points (bps) to 13.0%. The downtown vacancy rate decreased by 20 bps both quarter-over-quarter and year-over-year to 10.5%. The suburban vacancy rate fell by 10 bps from Q1 and was unchanged from the year-earlier period. Nearly two- thirds of markets tracked by CBRE Research registered quarterly decreases in vacancy.
- Gross asking rent growth continued to slow, reflecting a balance between supply and demand during the past few years. The average rent increased by 1.3% year-over-year and 0.4% quarter-over-quarter. Continuing the trend of recent quarters, the suburban market posted stronger annual growth of 3.0%. Rents were flat in the downtown market in Q2 and over the past year. Despite the slowdown, 84% of markets registered year-over-year rent gains. Four of the five top markets for annual rent growth were in the West: Los Angeles, Portland, Oakland and Seattle.