Office vacancy rates continued to decline in most cities during the fourth quarter of 2013, prompting landlords to ask for higher rents in more than half of the country.
U.S. office buildings absorbed 14.3 million square feet of empty space in the fourth quarter, according to commercial real estate services firm Cassidy Turley. That was less space than was absorbed in the third quarter, but it marked the 14th consecutive quarter of improved occupancy for landlords.
Vacancy in the third quarter was 15.1% by Cassidy Turley's reckoning, down more than 2 percentage points from the recessionary peak of 17.3%.
“Office vacancy is clearly tightening, but at a rate that is much slower than past recoveries,” said Kevin Thorpe, chief economist at the
Los Angeles was not among the markets where landlords are clearly gaining ground, however. L.A. ranked 70th in demand out of 80 markets surveyed as office vacancy grew in the fourth quarter.
"In general, L.A. has been one of the slowest office sectors to recover," said Arty Maharajah, vice president of research at Cassidy Turley. "But the local economy is showing clear signs of momentum. L.A. added 66,400 jobs through the 12 months that ended in November 2013 – third highest in the country behind New York and Houston."
In terms of demand, the top 10 U.S. markets for 2013 were New York, Dallas, Houston, San Jose-Silicon Valley, Atlanta, Denver, Boston, Seattle, Chicago and Miami.
The top markets where landlords raised their asking rents were: San Francisco, New York, Denver, San Jose-Silicon Valley, Austin, Dallas, Salt Lake City, San Mateo County, Oakland-East Bay and San Diego.