OFFICE MARKET HIGHLIGHTS:
- Absorption was positive this quarter (+78,658 SF) after two consecutive quarters of negative absorption to start the year (-263,088 SF in Q1 & Q2 combined). Q3’s positive absorption was largely due to the Northwest, South Central and Suburban West Dodge submarkets combining for a total of +138,838 absorption.
- Central Dodge, Downtown, Midtown, and Miracle Hills Submarkets have had two consecutive quarters of negative absorption (total of -250,807 SF), which is atypical as these core office submarkets are usually some of the stronger performers.
- The vacancy rate continues to decrease. At the end of Q3 the vacancy rate is 7.54% compared to 8.53% last quarter (Q2) and a year ago Q3 2021 when it was 9.30%. Note that this vacancy rate does not account for 865,971 SF of available sublease space on the market, due to the fact
that rent is still being collected on that space. The vacancy rate does not take into account a significant amount of “ghost space” which is leased but not occupied nor offered for sublease.
- The market continues to see no new construction and we don’t expect that to change with interest rates rising, construction costs remaining high, and uncertainty of workplace strategies/working from home.
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