CommercialEdge: Office Market Continues to See Challenges

(Asset class per square foot for sales transactions; Image via CommercialEdge)

CommercialEdge, Santa Barbara, Calif., found the average U.S. office listing rate was at $37.35 per square foot, down about 1.8% year-over-year, in January. That’s also down about 29 cents from December.

Class A and A+ office spaces’ average rates have declined 2% year-over-year to sit at $45.78 per square foot.

Class B has inched up by 0.4% to $30.22 per square foot; Class C was up 5.7% to $23.23.

Suburban properties’ rates have edged up slightly, but central business district spaces are down 7.3% year-over-year. Urban offices have fallen slightly.

The national vacancy rate also continues to tick up, to 18% in January. That’s up 130 basis points year-over-year.

Under-construction space is at 97.2 million square feet nationwide, or 1.4% of the total stock.

Life science projects are particularly active, with 27.8% of all new office construction. That’s a significant increase compared with pre-pandemic numbers, at 7.3% in 2019.

The U.S. office market saw $1.5 billion in office sales transactions (an average of $195 per square foot) through the end of January, with the largest share of activity in the Bay Area.