Office Market in U.S. Begins Recovery as Vacancy Rate Declines

06Apr11

Office vacancies in the U.S. dropped for the first time in more than three years in the most recent quarter and rents climbed, signaling the market is beginning a recovery as the economy improves.

The national vacancy rate fell to 17.5 percent in the first quarter from 17.6 percent in the previous three months, Reis Inc. said in a report dated April 5, 2011. The drop was the first since July through September of 2007. Asking and effective rents rose for the second straight quarter after more than two years of declines, the New York-based property-research firm said.

“This is the first quarter, at least on a national basis, where the change is strong enough to qualify it as the first quarter of a recovery,” Ryan Severino, an economist at Reis, said in an interview. “We have finally gotten to an inflection point where the good is starting to outweigh the bad.”

The rebound in demand for office space is spreading beyond New York and Washington, which have been leading the growth, Reis said. Gross domestic product growth adjusted for inflation has been positive for the past six quarters as the U.S. economy emerged from the recession. Employers have added jobs for six consecutive months, according to the Bureau of Labor Statistics.

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