Office Transaction Volume Reaches New Highs
Office investors continue to focus on high-quality assets predominantly in Manhattan, New Jersey and Los Angeles, the latest Yardi Matrix office report finds.
Report Highlights
- Direct asking office rents decreased slightly, averaging $37.37 per square foot in April, 2.5 percent lower from the same period last year.
- Office vacancy averaged 15.7 percent across the top 50 U.S. office markets, unchanged from the month prior.
- The under-construction pipeline included 148.2 million square feet of office space at the end of April.
- National office transaction volume totaled $26.7 billion at the end of April, surpassing last year’s volume.
National average full-service equivalent listing rates averaged $37.37 per square foot at the end of April, down 250 basis points when compared to the same period last year. Despite having some of the largest under construction pipelines in the country, some markets continued to post some of the highest office listing rates, including Charlotte ($32.29 per square foot in April, a 12.2 percent increase year-over-year) and Miami ($47.76 per square foot, a 10.9 percent increase).
Meanwhile, the national office vacancy rate continued its downward trajectory. It clocked in at 15.7 percent in April, decreasing by 20 basis points from the prior month.
Sun Belt development rages on
The active pipeline included 148.2 million square feet of office space under construction at the end of April—accounting for 2.2 percent of total stock. The planned stock further pushes the rate to 6.0 percent of existing stock. Unsurprisingly, Austin continues to lead the way in terms of development activity: nearly 10.3 million square feet of office space was underway in the market as of April, accounting for 11.7 percent of total stock and nearly 7 percent of all office space underway at national level.
Office construction activity was also high in other Sun Belt markets including Nashville (5 million sq. ft., 8.6 percent of total stock), Miami (5.4 million sq. ft., 7.1 percent of stock) and Charlotte (2.8 million sq. ft., 3.6 percent of stock).
Transaction volume off to new record
Office transaction volume amounted to $26.7 billion year-to-date in April. Office assets traded at an average $277 per square foot at the end of April, with investors focusing on high-quality developments. Sales activity was highest in Manhattan, where $1.8 billion worth of office assets traded year-to-date in April at an astounding $949 per square foot. Right across the Hudson River, office sales totaled $1.5 billion over the same period of time.
Read the full Yardi Matrix office report
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