U.S. Office Transactions Overtake 2020 Volume; Vacancies Stable

Photo credit: Mikhail Nilov

Office sales completed through November exceeded $68 billion, surpassing last year’s total volume by 11 percent, reported Yardi CommercialEdge, Santa Barbara, Calif.

“Furthermore, the average sale price rose to an all-time high this year,” CommercialEdge said in its December National Office Report. It noted the average sale price equaled $291 per square foot in November. “Investor confidence in high-quality assets played a significant role in the stable evolution of prices this year, offsetting uncertainties brought on by the pandemic.” 

Manhattan office space commanded $1,267 per square foot in November, the highest among the 50 large markets analyzed, the report said. San Francisco office prices ranked second at $666 per square foot. Sale prices for office space in Seattle ($558 per square foot) and the Bay Area ($523 per square foot) claimed the third and fourth spots on the list.

In another positive sign for the office sector, more people continue to return to the workplace. Office monitoring firm Kastle Systems, Falls Church, Va., tracks the number of users entering offices in the 10 largest U.S. cities compared to a pre-COVID baseline. The firm’s Back to Work Barometer reached 39.8 percent occupancy last week compared to 33.6 percent in mid-September.   

CommercialEdge said the office pipeline across the top 50 markets is shrinking. It found 152.8 million square feet of office space under construction in late November, down 12 million square feet since January. Year-to-date, 48.2 million square feet of office stock started the construction process, “noticeably less than in the previous two years,” the report said. 

Nationally, asking rates for office space averaged $38.62 per square foot in November. Average asking rents remained unchanged compared to October but are up 1.2 percent year-over-year. 

Los Angeles office space saw the most significant increase in asking rents with rents up 8.1 percent year-over-year to $41.62 per square foot in November, CommercialEdge said. Meanwhile, listing rates in the Bay Area as well as Tampa registered a 6.2 percent year-over-year rise to $55.79 and $29.70, respectively. The average asking rent in Miami was $43.43 in November, up 5.8 percent from the same period last year. 

CommercialEdge reported the slowest office rent growth in Charlotte and Atlanta. Asking rents for Charlotte office space inched up just .5 percent in November to $29 and Atlanta asking rents increased increased.8 percent to $27.64.