The U.S. office sector of the commercial real estate industry showed continued signs of recovery in the first quarter of this year, albeit at a somewhat abstemious pace when compared to levels from the latter part of 2010 and throughout 2011, according to Jones Lang LaSalle's First-Quarter 2012 Office Outlook.
According to the new report, the U.S. office market absorbed a little less than 1 million square feet during the quarter, far below the 8.6 million square feet averaged over the prior six quarters. Nearly two-thirds of the 45 markets tracked demonstrated stable or declining leasing volumes, although 57.8% of the markets saw gains in tour velocity and active tenants compared to the previous quarter.
Sales activity and volume were evenly distributed among geographies, with nearly one-third of markets reporting an uptick in sales. The nation's largest markets, accounting for more than 25% of inventory, lagged substantially and lowered absorption levels for the country with approximately 2.2 million square feet of occupancy declines. Washington,Â D.C., and New York recorded leasing velocity levels that were down nearly 45% from the previous quarter.
Construction remained low across most markets; however, activity increased from 18.1 million square feet under development to 33.7 million square feet.
‘Overall, the first quarter presented a mixed bag of results and expectations for the rest of the year,’ says John Sikaitis, senior vice president of research at Jones Lang LaSalle. ‘While the recovery slowed during the quarter, it remains intact. Looking ahead to the remainder of 2012, markets will continue to recover and, in some cases, contract at different rates of speed. Overall, rents across most markets will grow, but at slow and measured paces unless some significant cushion of technology or energy pockets exist.’