OFFICE MARKET HIGHLIGHTS:
- The vacancy rate for the quarter had an immaterial increase from 9.10% to 9.17%. This reflects an active market. Previously, we saw space added to the market with limited new leasing activity while today’s market continues to see space added but deal velocity is increasing.
- The quarter has seen 164,145 square feet of negative absorption. This is primarily a result of CSG offering 202,566 square feet of space for sublease in the Suburban West Dodge submarket. This ends two consecutive quarters of positive absorption.
- The market continues to see businesses evaluating their workplace strategies. As a general statement, large national companies doing business across the country are adopting hybrid/work from home strategies, which has and continues to dramatically reduce their office footprint. Locally owned businesses are embracing a more flexible work environment than pre-pandemic but have a tendency to want employees in the physical office.
- Average asking rental rates continue to rise primarily as a result of construction costs. Direct leases with landlords have not experienced notable change in rental rates. However, there are opportunities for tenants to find below market deals with the abundance of sublease space on the market.
- The market has still not seen significant new construction starts. The buildings currently under construction were planned pre-pandemic and are anchored by owner-users.
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