North American Research
OFFICE MARKET OUTLOOK
Q2 2015
Top CBDs See Solid Growth in 2nd Quarter,
US - Canada Performance Diverges
Andrew Nelson Chief Economist | USA
Key Takeaways
>> The U.S. economy picked up in Q2 amid stronger job growth.
Housing, construction and consumer spending all improved, and
GDP for Q2 saw a strong pop in the second revision, but the final
tally is still undetermined. Meanwhile, the Canadian economy
has actually contracted this year, mostly due to falling commodity
prices.
Market Indicators
>> Absorption improved to 22.6 million square feet (MSF) in the
approximately 70 metro areas we track across North America.
This is more than double that in Q1 (10.6 MSF) though still modest
by historical standards at this point in the cycle. Some 23.1 MSF
was absorbed in the U.S. with increases in both central business
district (CBD) and suburban markets. Spurred by weakness in
energy markets, Canada saw negative absorption of 537,000 SF
in Q2.
RENTAL RATE**
>> The vacancy rate in the much larger U.S. fell 20 basis points to
13.0%, while the vacancy rate in Canada increased by 50 basis
points to 9.0%.
>> Development is generally concentrated in the most in-demand
markets including Manhattan, Los Angeles, San Francisco,
Houston, San Jose and Atlanta. In Canada, supply is focused in
Toronto, Vancouver, Calgary and Edmonton.
>> The North American construction pipeline currently totals 119.2
MSF of office space under development with 101.7 MSF of that
in the U.S. with Houston, Seattle, Silicon Valley, Dallas and
Washington, D.C. expecting significant amounts of new space to
come to market in the next few years.
>> Colliers’ survey of local market experts shows a sharp split
between the U.S. and Canada outlooks. Respondents in the U.S.
are strongly positive about the prospects for absorption and rent
growth over the rest of the year. Respondents in Canada are
consistently negative about the prospect for rent growth and have
mixed views on future absorption.
Relative to prior period
U.S.
Q2 2015
U.S.
Q3 2015*
CANADA
Q2 2015
CANADA
Q3 2015*
VACANCY
NET ABSORPTION
CONSTRUCTION
*Projected
**Rental rates for current quarter are for CBD; rent forecast is for metrowide rents.
Summary Statistics, Q2 2015
North America Office Market
NORTH
AMERICA
U.S.
CANADA
Vacancy Rate
13.0%
9.1%
12.7%
Change From Q1 2015
-0.2%
0.5%
-0.2%
Absorption
23.1
-0.5
22.7
New Construction
15.4
2.2
17.7
101.7
17.3
119.0
$47.69
$48.49
1.7%
-2.7%
$28.21
$32.50
0.4%
0.6%
(Basis Points)
(MSF)
(MSF)
Under Construction
(MSF)
ASKING RENTS (USD/CAD)
PER SQUARE FOOT PER YEAR
Downtown Class A
Change From Q1 2015
Suburban Class A
Change From Q1 2015
CANADA
Absorption Per Market (SF)
Q1 2015 to Q2 2015
Absorption Per Market (SF)
Q1 2015 to Q2 2015
2,300,000
NORTHEAST
MIDWEST
1,150,000
2,300,000
230,000
1,150,000
-230,000
230,000
-1,150,000
-230,000
-2,300,000
-1,150,000
WEST
-2,300,000
SOUTH
SF By Region
2 billion
1 billion
SF By Region
200
million
2 billion
Office Vacancy, Inventory & Absorption
Occupied SF
1 billion
Vacant SF
200 million
Occupied SF
Q2 2015 | North America
Vacant SF
U.S. OFFICE
MARKET
2013 - Q2 20152015
Office
Market
| Q2Q22013–Q2
| US
16.0
30.0
For a while, it looked like 2015 was going to be the year the U.S.
economy broke out of the moderate growth path it has been on
for the past few years. Although the quarterly numbers have been
uneven, GDP has been growing at a roughly 2.5% year-over-year
rate for several years. Even after the bumpy first quarter, hurt
by the severe weather and collapse in oil prices, the economy
seemed ripe for a bump. But Q2 indicators didn’t pop the way
many predicted, and now it seems likely the 2.5% pace is going to
continue for a while.
14.3
25.0
13.9
14.1
13.4
13.9
13.7
14.0
13.2
13.2
13.0
20.0
12.0
10.0
8.0
15.0
6.0
10.0
Vacancy %
U.S. Economic Trends
4.0
5.0
2.0
0.0
Q3
13
20
Q4
14
20
Q2
Q3
Q4
15
20
Q2
Q1
Q1
Q2
To be sure, the economy’s current performance is solid. Through
seven months, the economy is on its way to adding 2.5 million
Absorption MSF
Completions MSF
Vacancy %
jobs, somewhat below last year’s 3 million, but excellent numbers
nonetheless and great drivers for all types of commercial real estate
Source: Colliers International
demand, and offices in particular. Office-using employment sectors
have expanded robustly. Professional and business services added
CANADIAN DOWNTOWN OFFICE ABSORPTION BY MARKET Q2-15
CANADIAN DOWNTOWN OFFIC
666,000 jobs over the past 12 months through July, while financial
Nonfarm and Office-Using Employment BY
(Jan.2008=1)
MARKET Q2-15
Nonfarm
and
Office-Using
Employment
activities (156,000) and information (53,000) also did well.
1.04
544.3
1.02
1.00
236.4
167.7
0.98 65.3
53.4
0.96
29.8
0.94
23.7
0.92
2.7
0.90
-18.8
-24.1
-600
-200
Toronto, ON
Calgary, AB
Edmonton, AB
Montréal, QC
Vancouver, BC
Victoria, BC
Regina, SK
Winnipeg, MB*
1.1
1.0
0.3
0.2
0.1
Waterloo Region, ON 0.0
Saskatoon, SK 0.0
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Vancouver,
Other economic metrics are also solid. Consumer confidence
is BC
Toronto,
ON
strong, with the University of Michigan’s Consumer Sentiment
Index
Montréal,
up 14% year-over-year as of Q2 (though falling somewhat
moreQC
Victoria, BC
recently). The housing market recovery is in full swing, with
sales
Winnipeg, MB*
of new and existing home sales reaching multi-year highs in recent
Waterloo Region, ON
months, according to the National Association of Realtors.
Auto
Edmonton, AB
sales are up to a strong 17.5-million-per-year pace. Consumer
Regina, SK
spending is not growing as much as would have been expected
Saskatoon, SK
Ottawa,
given the reduction in energy costs, but the impact of lower
oil ON
Calgary, AB
prices tends to lag and may still provide a boost to the economy
in -844.5
-1,000
the second half.
200
600
All Other
Thousands
Ottawa, ON 0.0
0.0 0.5
Office Using
1.0
1.5
Note: Jan 2008 = 1
Source:
BLS, IHS Global Insight, and Colliers International
* - Q4-14 data displayed. These mark
* - Q4-14 data displayed. These markets report
semi-annually.
2
North American Research Report | Q2 2015 | Office
Market Markets:
Outlook | Colliers International
N.A. Downtown
Excluding renewals, of the leases signed this quarter in
CBD/downtown, did most tenants:
N.A. Downtown Markets:
What was the trend in Fr
The timing and extent of interest rate hikes remain of keen interest
to the commercial real estate market. It appears as if the Federal
Reserve will begin to raise rates in the fall, although the increases
are likely to be modest until the economy proves it can withstand
the removal of such stimulus. The increases are likely to have a
marginal effect on loan rates and acquisition yields, which will
have some impact on real estate capital markets but not likely to be
debilitating.
Despite this underlying economic strength, office leasing
continues to be weak relative to historical standards. To wit,
office employment is now 4.5% above its prior peak, yet the office
occupancy rate is still some 100 bps below its peak in 2006.
This, despite unusually limited construction. Firms continue to
be conservative in taking on new space, reflecting new emphasis
on more efficient space layouts and increasing opportunities
for telecommuting. With the exception of firms in some key
tech markets, few businesses seem inclined to lease space in
anticipation of future hiring.
Vacancy
After pausing during the weak first quarter, office vacancies
resumed their slow decline during Q2. The North American
vacancy rate fell 20 basis points to 12.7% from 12.9% in Q1. In
the U.S., vacancy rates fell to 13.0%, down from 13.2% in Q1. The
25-basis-point decline was slightly better than the 16-basis-point
average since the peak in Q1 2010. Canada’s office vacancy rate
rose sharply, up 48 basis points to 9.0% from 8.6% in Q1.
The improvements in the U.S. were fairly broad-based. Vacancies
in CBD markets fell by 34 basis points to 11.6%, down from 12.0%
in Q1, while suburban vacancies fell 20 basis points to 13.6% from
13.8% in Q1. The vacancy rate declined in each region, led by the
Midwest (-36 basis points to 13.3%), Northeast (-27 basis points
to 12.9%), West (-23 basis points to 12.9%) and South (-17 basis
points to 13.0%).
The vacancy story continues to be shaped by long-term
demographic and social trends. Among the largest 30 markets in
the U.S., the best performances in Q2 were turned in by Oakland
(-1.9% decline in vacancy rate from Q1), New Hampshire (-1.6%),
Lowest Overall Vacancy Rates
Q2 2015 - North America
MARKET
VACANCY
MARKET
VACANCY
Toronto, ON
6.1%
Denver, CO
11.9%
NYC - Midtown South
7.6%
Baltimore, MD
12.0%
Pittsburgh, PA*
8.1%
Minneapolis, MN
12.5%
Seattle/Puget Sound, WA
10.1%
Philadelphia, PA
12.6%
NYC - Midtown
10.1%
Houston, TX
14.1%
North America 12.7%
U.S. 13.0%
Canada
9.1%
*Q1-15 data shown
Note: Ranking is of the 20 U.S. and Canadian markets with at least 100 MSF of
inventory
3
Largest Q-o-Q Decrease in Overall Vacancy Rate
Q2 2015 - North America
MARKET*
VACANCY RATE
Q1 2015
VACANCY RATE
Q2 2015
BASIS-POINT
CHANGE
NYC - Midtown
11.1%
10.1%
-94
Detroit, MI
16.0%
15.2%
-84
Philadelphia, PA
13.3%
12.6%
-68
Atlanta, GA
15.2%
14.7%
-51
Minneapolis, MN
12.9%
12.5%
-49
Dallas, TX
15.7%
15.2%
-46
NYC - Downtown
14.6%
14.1%
-45
Boston, MA
14.6%
14.3%
-28
Los Angeles, CA
16.5%
16.3%
-28
Seattle/Puget Sound, WA
10.3%
10.1%
-16
North America
12.9%
12.7%
-20
Markets > 100MSF
13.6%
13.4%
-22
Markets < 100MSF
12.0%
11.8%
-17
* Markets with 100+ MSF of inventory
Source: Colliers International
San Jose (1.2%), Nashville (-1.0%), Midtown Manhattan (-0.9%)
and Detroit (-0.8%). These markets generally are known as centers
of TAMI (technology, advertising, media and information) segments,
which are leading the way in job creation among office-using
industries and/or are locations that have growing populations due
to their attractiveness to Millennials and others looking for appealing
live-work-play environments.
Few U.S. markets experienced increases in vacancy rates in Q2,
and those that did are generally small suburban metros. The only
large metro with rising vacancy rates was Houston, where vacancy
rates climbed 108 basis points to 14.1%, from 13.0% in Q1. The
increase was focused on the CBD, where vacancy rates increased
149 basis points, and reflects new supply coming on line just as
weakness in the oil market in the energy sector forced cutbacks
among energy sector firms.
In Canada, the story is much different, as the vacancy rate is
headed upward, in large part because the fall in oil prices has
had a negative impact on the energy-reliant markets in the West.
Particularly hard hit was Calgary, where the vacancy rate jumped
242 basis points in one quarter to 13.0% from 10.6% in Q1, while
Edmonton’s vacancy rate climbed 59 basis points to 11.2% from
10.6% in Q1. However, Canada also is in the midst of an ill-timed
supply surge that caused vacancy rates to rise even in markets with
positive absorption in Q2, such as Vancouver and Toronto.
Going forward, we expect current trends to hold in coming
quarters. Our forecast calls for U.S. vacancy rates to continue
to decline modestly, down to 12.7% in Q2 2016, with the biggest
improvements in the South and Midwest and the least in the
Northeast. Steadily improving vacancy rates in Downtown and
Midtown Manhattan are likely to be offset in the Northeast by
increases in suburban markets and CBDs in Washington, D.C., and
Baltimore.
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
6.0
10.0
Expanded
we Space,
expect21.0%
the vacancy
Vacanc
N.A. Downtown Markets:
Thousands
0.0(in months) offered by
What was
8.0 the trend in Free Rent
13 Q3
Q4 2014
CBD landlords this quarter?
20
Excluding renewals, of the leases signed this quarter in
15.0
CBD/downtown, did most tenants:
Q1
Q2
4.0
Absorption MSF
North American
Survey: LEASES
Less, 18.5% Market
2.0
5.0
C
Meanwhile,
rate in Canada to continue
N.A. Downtown Markets:
climbing due to the combination of negativeHeld
absorption and a bump
0.0
Same,
63.0%
Excluding
renewals, of the
leases
signed this quarter in
Steady, 59.3%
CBD/Downtown
Markets:
in supply. Our forecast is for a 10.9% office vacancy rate in13Canada
Q3
Q3
Q2
Q4 2015 CBD/downtown,
Q4 2014 Q2
did most tenants:
0
2
Excluding
by Q2 2016, primarily
due to huge spikes in Calgary and
Q1 renewals, of leases signed Q2 2015,
Q1
Q2 Ottawa.
N/A, 6.2%
CANADIAN DOWNTOWN OFFICE ABSORPTION BY MARKET Q2
tenants:
N/A, 8.6%
Montreal is the only major Canadian market in which we see
vacancies declining.
Absorption MSF
Completions MSF Expanded
Vacancy %
Space, 21.0%
More, 9.9%
Contracted
Space 13.6%
Absorption & Tenant Demand
Vancouver, BC
Net absorption inCANADIAN
Q2 also was
a tale of two
countries.
It picked
DOWNTOWN
OFFICE
ABSORPTION
BY MARKET Q2-15
up considerably in the U.S. after a weak performance in Q1, while
in Canada overall leasing was negative with wildly mixed results
by metro. Of the 80 markets surveyed in the U.S., 66 or 83% had
544.3
Vancouver,
BCthe 70% that had positive absorption in
positive absorption,
up from
236.4
N.A.
Downtown
Markets:
Toronto,were
ON negative. In Canada, just five of the
Q1, while only 14 metros
What was the trend for tenant Improvement
allowances
Montréal,
QC
12 markets surveyed
had
positive
absorption;
was flat167.7
and six
offered
by CBD
landlords one
this quarter?
65.3
Victoria, BC
were negative.
Winnipeg, MB
53.4
29.8
MSF
Absorption in
the U.S.
totaled
in the
Waterloo
Region,
ON 23.1 MSF, including 7.7
Less, 16.0%
23.7
CBDs and 15.4 MSF
in theAB
suburbs. Both represented substantial
Edmonton,
2.7
increases over Q1 but
CBDs
turnaround
both
Regina,
SKrecorded the bigger
Same, 63.0%
absolutely and relatively.
were virtually flat
in Q1, with net
-18.8
Saskatoon,CBDs
SK
N/A, 8.6%
absorption of only 436,000
amounted to
-24.1
Ottawa, ONSF. So the Q2 leasing
a gain of over 7 MSF.
But the
60% pickup in suburbs was still
Calgary,
AB -844.5
significant, up almost 6 MSF
over the -600
9.6 MSF -200
absorbed 200
in Q1. In 600
-1,000
More, 12.3%to 3.3% of available space in theThousands
all, Q2 absorption amounted
CBDs
and 2.7% in the suburbs, compared to 0.2% and 1.7% respectively
in Q1. However, there are regional differences at play: In the
Northeast and Midwest, absorption is concentrated in the CBDs,
while in the West and South, it is concentrated in the suburban
markets.
N.A. Downtown Markets:
Excluding renewals, of the leases signed this quarter in
Overall, the Q2 absorption
numbers are
in line with the
CBD/downtown,
didroughly
most tenants:
pace of absorption in recent years and thus not likely to signify
that the market is about to break out. Rather, we expect continued
Expanded
positive absorption
in the U.S. as the economy improves but still
Space, 21.0%
not commensurate with the robust growth in office-using jobs due
Held
to firms’ more efficient space usage as noted
above.
Plus, the large
Steady,
59.3%
amount of shadow space that was created in the wake of the last
6.2% but has not totally disappeared. Consequently,
recession hasN/A,
shrunk
job growth is fueling less demand for office space than has been
the case in prior economic
expansions.
Contracted
With CBDs, Manhattan,
which includes a combined 2.9 MSF in
Less, 16.0%
Midtown, Midtown South and Downtown, represented roughly
one-third of all absorption. Space is being taken
by a variety
Same,up
63.0%
N/A, 8.6%
4
544.3
236.4
Toronto, ON
167.7
Montréal,
QC
N/A,
6.2% DOWNTOWN
CANADIAN
OFFICE UNDER CONSTRUCTION
65.3
BY MARKET
Q2-15
Victoria, BC
53.4
Winnipeg, MB
Contracted
29.8
Waterloo Region,
ON
3.8
Toronto,Space
ON 13.6%
23.7
Edmonton, AB
3.4
Calgary, ABN.A. Suburban Markets:
2.7
Regina, SK
leases signed this quarter in
Edmonton,Markets:
ABExcluding renewals, of the2.1
Suburban
-18.8
Saskatoon,
SK
market, did most tenants:
1.1
Montréal, renewals,
QCyour suburban
Excluding
of leases
signed
Q2 2015,
-24.1
Ottawa, ON
1.0
Vancouver, BC
tenants:
-844.5
Calgary, AB
0.3
Victoria,
BC
Expanded
-600
-200
200
600
-1,000
0.2
Regina,
SK 25.6%
Space,
Thousands
0.0
Waterloo Region, ONN.A.
Downtown Markets:
Held Improvement allowances
0.0was the trend for tenant
Winnipeg, MBWhat
Steady,
56.1%
offered
by
CBD
landlords
this quarter?
N/A, 4.9%
Saskatoon,
SK 0.0
Ottawa, ON
0.0
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Less,
16.0%Downtown Markets:
N.A.
Millions
Contracted
Excluding
Space,
13.4% renewals, of the leases signed this quarter in
CBD/downtown, did mostSame,
tenants:
63.0%
N/A, 8.6%
Expanded
21.0%
NorthSpace,
American
Market Survey: CONCESSIONS
Downtown Markets:
Held
More,N.A.
12.3%
59.3%(in months) offered by
What was the trend inSteady,
Free Rent
CBD/Downtown
CBDMarkets:
landlords this quarter?
The trend
in Free Rent offered by landlords
N/A, 6.2%
Q2 2015:
Less,
18.5%
Contracted
Space 13.6%
Same, 63.0%
N/A, 8.6%
More, 9.9%
Space 13.6%
Metros with the most Q2 absorption remain generally the same
as in recent quarters. Midtown Manhattan topped the list with 2.2
MSF, with new 200,000+ SF leases signed by financial tenants
Bloomberg and TD Bank. Other top markets include Dallas (1.7
MSF), Atlanta (1.5 MSF), Los Angeles (1.4 MSF), Philadelphia
(1.1 MSF), San Jose – Silicon Valley (972,000 SF) and RaleighDurham-Chapel Hill (933,000 SF). One surprise might be the
N.A. Downtown Markets:
1.9 MSF absorbed in Detroit,
where
demand
is growing
from allowances
What was
the trend
for tenant
Improvement
companies that supportoffered
the booming
industry
and the fruit of
by CBD auto
landlords
this quarter?
downtown redevelopment efforts led by financier Dan Gilbert.
Held
Steady, 59.3%
N.A. Downtown Markets:
CBD/Downtown
Markets:
What was
the trend for tenant Improvement allowances
offered
by CBD
landlords this quarter?
The trend for
Tenant
Improvement
allowances offered by landlords Q2 2015:
Less, 16.0%
N/A, 8.6%
N.A. Suburban Markets:
63.0%signed this quarter in
Excluding renewals, ofSame,
the leases
your suburban market, did most tenants:
Expanded
Space,
25.6%
More, 12.3%
Source: Colliers International
N/A, 4.9%
North American
Research Report | Q2 2015 | Office Market Outlook | ColliersContracted
International
More, 12.3%
Space, 13.4%
Held
Steady, 56.1%
of traditional firms, including professional services, media and
consumer goods, as well as some new sources such as WeWork.
The executive suites/co-working company now leases nearly 2
MSF in Manhattan, making it one of the metro’s biggest occupiers.
Other markets with strong CBD absorption in Q2 were Boston
(577,000 SF), Detroit (500,000 SF) and Washington DC (483,000
SF). CBDs that gave up the most space in Q2 were: Houston
(-639,000 SF), Baltimore (-428,000 SF) and Denver (-135,000
SF).
Top Markets for Absorption
Q2 2015 - North America
MARKET*
ABSORPTION (MSF)
NYC - Midtown
2.21
Detroit, MI
1.93
Dallas, TX
1.72
Atlanta, GA
1.59
Los Angeles, CA
1.36
Philadelphia, PA
1.13
Washington, DC
0.60
Minneapolis, MN
0.56
Phoenix, AZ
0.53
Toronto, ON
0.53
North America
22.65
U.S.
23.13
Canada
-0.48
*Markets with 100+ MSF of inventory
Source: Colliers International
Similar to absorption, rent growth varies significantly by location.
Asking rents made robust gains in U.S. downtown markets, rising
1.7% in Q2 and 5.9% year-over-year. Asking rents in U.S. suburban
markets are rising at a more moderate rate, up 0.4% in Q2 and
2.9% year-over-year. Increases in U.S. downtown asking rents
were led by primary coastal CBD markets. The Northeast (1.8%
in Q2 and 6.4% year-over-year) and West (2.3% in Q2 and 8.4%
year-over-year) outperformed the Midwest (-0.2% in Q2 and 2.2%
year-over-year) and South (1.6% in Q2 and 3.3% year-over-year).
Downtown markets that outperformed include Manhattan Midtown
South (2.9% in Q2 and 11.3% year-over-year), Atlanta (8.0% in
Q2 and 9.5% year-over-year), Los Angeles (7.1% in Q2 and 10.2%
year-over-year), Oakland (5.2% in Q2 and 13.7% year-over-year),
San Francisco (1.6% in Q2 and 9.3% year-over-year) and Seattle
(1.5% in Q2 and 9.9% year-over-year).
Absorption in suburban metros was led by Dallas (1.5 MSF), Atlanta
(1.5 MSF) Detroit (1.4 MSF), Los Angeles (1.2 MSF) and San Jose
– Silicon Valley (868,000 SF). Dallas continues to thrive, despite
the hovering cloud of lower energy costs, as companies in finance,
communications and consumer products take up space. Atlanta’s
suburban submarkets, particularly Buckhead and Central Perimeter,
benefit from proximity to transit, which helps attract Millennial
workers, while Northwest Atlanta is boosted by momentum
stemming from the construction of the new baseball stadium for
5
the Atlanta Braves. The Los Angeles suburbs are drawing creative
industries in technology and media, with new tenants including
Hulu and Apple. San Jose – Silicon Valley continues to be a haven
for technology and information firms – nearly 20% of all vacant
suburban space and 10% of vacant downtown space were leased in
Q2 alone.
Asking rents in the suburbs were led by the West (1.9% in Q2 and
7.0% year-over-year), while the Northeast struggled (-1.4% in Q2
and -1.1% year-over-year). Suburban markets that outperformed in
terms of rent growth include: Atlanta (1.5% in Q2 and 9.7% yearover-year), Austin (4.2% in Q2 and 6.2% year-over-year), Detroit
(3.4% in Q2 and 4.8% year-over-year), San Francisco Peninsula
(3.2% in Q2 and 18.4% year-over-year) and San Jose – Silicon
Valley (3.6% in Q2 and 12.8% year-over-year).
With the amount of attention around companies focusing on CBD
markets, the general success of suburban markets in attracting
tenants – nearly 26 MSF absorbed year-to-date compared to 7.1
MSF for CBDs – may come as a bit of a surprise. One factor is
that population and job growth are strong in markets in the South,
West and Southwest, where a higher proportion of offices are in
locations classified as suburbs. Another factor is that there is a
dearth of available space in some CBDs, particularly if a tenant
is looking for a large block. Consequently, we expect that innerring suburban offices in growing markets with access to public
transportation and amenities that appeal to workers will continue to
find success attracting occupiers.
In Canada, the three top markets for absorption in Q2 – Vancouver
(650,000 SF), Toronto (527,000 SF) and Montreal (493,000 SF)
– gained roughly as much space as was lost in Calgary (-1.7 MSF)
during the quarter. Calgary’s office market ramped up when oil
prices were above $100 per barrel and is feeling the effects of the
sharp decline in prices to below US$50 per barrel as companies
such as ConocoPhillips, Nexen and Talisman have announced mass
layoffs at their Calgary offices.
With rising vacancy rates, it is no surprise then that asking rents
in Canada have been flat to negative. In the suburbs of Canada,
asking rents rose 0.6% in Q2 and were -0.4% year-over-year. In
the Canadian CBDs, asking rents were -2.7% in Q2 and up 1.4%
year-over-year. The most dramatic changes have been in Calgary
(-6.0% in Q2 and -19% year-over-year) and Ottawa (-25.0% in Q2
and 0.0% year-over-year). Ottawa’s vacancy rate has climbed 270
basis points to 6.0% as a result of cutbacks by the region’s biggest
employer, the federal government, in an effort to eliminate a $2
billion dollar deficit.
Construction Activity
New supply growth continues to be restrained, with a total of 17.7
MSF in North America, comprising 15.4 MSF in the U.S. and 2.2
MSF in Canada. Q2 was the second straight quarterly decline in
completions, and construction remains well below pre-recession
levels. In the U.S., completions rose more in suburbs (9.7 MSF)
than CBDs (5.7 MSF). There are signs that supply growth will pick
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
up, however, as 119.0 MSF is now under construction (101.7 MSF
in the U.S. and 17.3 MSF in Canada), or 22.9 MSF more than was
under construction in Q1. Of the stock under construction in the
U.S., 61 MSF is in the suburbs, concentrated in the South (38%)
and West (34%), while nearly three-quarters of the 40 MSF under
construction in the CBDs are in the West (42%) and Northeast
(31%).
Washington DC (4.0 MSF), while North and Central New Jersey
have a combined 2.5 MSF under construction.
Construction as % of Existing Inventory
Q2 2015 - North America
MARKET
SQUARE FEET
UNDERWAY
% OF
EXISTING INVENTORY
New inventory continues to be heavily concentrated in the most
in-demand markets. Financing for speculative projects outside of
core markets generally remains somewhat tight. More stringent
capital requirements imposed upon banks by regulators at the
beginning of the year are likely to help limit supply growth going
forward, particularly for projects in secondary and tertiary markets,
where the most likely lender would be a regional or local bank. The
regulations increase capital costs for banks, making loans more
expensive, and put pressure on developers to put at least 15%
equity in deals. Although the long-term impact is hard to judge, it
adds a layer of expense and complicates construction projects.
San Jose - Silicon Valley, CA
7,770,638
10.1%
Edmonton, AB
2,229,416
8.3%
Calgary, AB
5,169,387
7.8%
Seattle/Puget Sound, WA
8,777,806
6.7%
Only 16 downtown markets – less than one-quarter of metros
tracked by Colliers – had any new supply in Q2, and more than twothirds of the new inventory was in Manhattan. Seattle (428,000
SF) and Cincinnati (310,000 SF) were the only other CBDs with
more than a quarter-million SF that came online. The numbers in
the suburbs were slightly more spread out, as 29 of the 71 markets
had some new supply in Q2. Houston (2.1 MSF) had by far the
most space come online in the quarter, followed by Los Angeles
(866,000 SF) and Austin (656,000 SF).
North America
Top Markets for Office Space Under Construction
Q2 2015 - North America
MARKET
CONSTRUCTION (MSF)
Houston, TX
12.3
Seattle/Puget Sound, WA
8.8
San Jose - Silicon Valley, CA
7.8
Dallas, TX
6.5
Washington, DC
6.4
Boston, MA
5.4
San Francisco, CA
5.2
Calgary, AB
5.2
Toronto, ON
4.8
Phoenix, AZ
4.4
North America
TREND
San Francisco, CA
5,199,587
5.8%
Houston, TX
12,267,435
5.6%
Phoenix, AZ
4,397,100
3.3%
Toronto, ON
4,819,444
3.2%
Austin, TX
2,223,590
3.1%
Boston, MA
5,365,471
3.1%
119,019,888
1.8%
Note: Ranking includes markets with at least 2 MSF under construction.
Source: Colliers International
In Canada, 12.3 MSF is under construction in the CBDs, led by
Toronto (3.8 MSF) and Calgary (3.4 MSF). Toronto’s downtown
office vacancy rate has declined once again, currently at 2.6%.
Demand for space is strong, driven by the financial services sector,
where many of the newly-constructed buildings have no available
space and of the 3.8 MSF currently under construction, most of the
space is fully pre-leased. Calgary paints a different picture, where
the oil price slump has been weakening business investment. And
with 3.4 MSF of construction scheduled for completion between
2016 and 2018, recovery will be slow for the Calgary office market,
though tenants are in a good position to upgrade space.
119.0
Source: Colliers International
Leaders in space under construction in the CBD include: Seattle
(7.1 MSF), San Francisco (5.2 MSF), Manhattan (4.8 MSF) and
Chicago (3.6 MSF). In the suburbs, Houston has 10.8 MSF under
construction, which could be worrisome given the trend toward
negative absorption as a result of the drop in energy prices. Other
suburban markets with heavy supply pipelines include San Jose –
Silicon Valley (7.8 MSF), Dallas (6.0 MSF), Phoenix (4.4 MSF) and
6
TREND
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
Outlook
Although the office sector has made strides since the recession, it
continues to underperform relative to its typical recovery pattern
during an expansion period. Vacancy rates and rents have improved
incrementally for several years, but fundamentals are still weak in
many markets. Vacancy rates remain stubbornly high, and strong
rent growth is limited to the best markets. That is in stark contrast
to property segments such as industrial, the other major pro-cyclical
sector, which has benefited from increased trade and consumer
trends such as online sales that translate into robust demand for
warehouses and a wave of logistics development across the country.
Office demand, on the other hand, is being restrained by business
and technological trends. Demand for space is tempered by
companies’ economizing, designing more efficient workspaces and
telecommuting, even though office-using jobs have grown at a faster
rate than employment as a while.
Still, the office sector does have some positive trends and pockets of
strength. Absorption is likely to remain positive for the foreseeable
future, as job growth demonstrates no signs of faltering, especially
in office-using segments such as business services, finance and
technology. Key office markets – metros such as Manhattan, Los
Angeles, Dallas, Seattle, Atlanta and San Jose among elsewhere
– are bustling with new leasing from a wide range of firms in
technology, media, consumer products and more. Even companies
that are tightening belts can cut space only so much if staffs keep
growing. Development has largely been limited to markets where
demand is strongest, with large numbers of metros having virtually
no new supply. As vacancy rates drop, rents will continue to increase
in most markets.
Overall, though, the recovery will continue to be slow and spotty.
Markets that feature concentrations in significant growth industries
– think New York with finance, San Francisco and Boston with
technology, Houston with energy and healthcare – or those that
have become magnets of Millennials because of lifestyle – Seattle,
Portland, Denver, Nashville, etc. – will be more competitive and
experience faster growth. However, the confluence of trends that
limit growth in demand are likely to produce less robust upside than
would have been the case in previous cycles.
7
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
United States - Downtown - All Classes
EXISTING
INVENTORY (SF)
JUNE 30, 2015
NEW SUPPLY
Q2 2015 (SF)
Baltimore, MD
28,883,761
0
Boston, MA
63,254,333
Hartford, CT
9,971,800
New York, NY - Downtown Manhattan
New York, NY - Midtown Manhattan
New York, NY - Midtown South Manhattan
MARKET
UNDER
CONSTRUCTION
(SF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
YTD ABSORPTION
(SF) 2015
651,456
13.1%
14.1%
-428,951
-388,238
187,187
1,631,269
10.8%
10.2%
577,889
698,139
0
0
14.1%
14.0%
7,351
8,666
106,444,600
1,136,000
2,800,000
14.6%
14.1%
475,703
-1,375,364
234,039,911
589,237
514,237
11.1%
10.1%
2,208,463
1,782,753
NORTHEAST
163,787,088
2,272,563
1,509,500
7.7%
7.6%
205,910
1,061,354
Philadelphia, PA
42,539,370
0
1,958,682
10.5%
9.8%
284,589
378,726
Pittsburgh, PA*
32,445,384
0
959,246
9.2%
9.2%
19,408
19,408
Stamford, CT
18,901,657
0
0
18.9%
18.2%
135,915
-41,470
Washington, DC
143,852,712
111,466
2,328,605
10.9%
10.6%
483,445
73,631
White Plains, NY
7,744,936
0
0
14.9%
14.6%
29,071
-2,824
Northeast Total
851,865,552
4,296,453
12,352,995
11.0%
10.6%
3,998,793
2,214,781
SOUTH
Atlanta, GA
50,378,644
0
0
15.9%
15.6%
115,537
253,988
Austin, TX
12,327,837
73,430
747,284
8.2%
8.4%
50,227
377,770
Birmingham, AL
4,895,917
0
0
23.3%
22.6%
33,850
-74,291
Charleston, SC
2,252,948
0
164,190
9.9%
11.5%
-34,826
-60,554
Charlotte, NC
22,255,810
0
0
8.5%
8.3%
53,925
17,930
Columbia, SC
4,678,427
0
110,000
10.7%
10.5%
11,077
23,177
31,883,706
0
450,000
20.9%
20.4%
145,307
313,230
7,062,384
0
0
23.9%
22.3%
109,567
149,027
Ft. Worth, TX
10,121,276
0
0
13.3%
12.6%
67,420
126,321
Greenville, SC
3,562,131
0
0
15.9%
15.2%
32,722
24,516
42,866,022
0
1,463,258
12.6%
14.1%
-639,740
-1,630,632
3,893,972
0
0
8.3%
8.6%
-44,373
-37,687
Jacksonville, FL
15,572,544
0
0
13.7%
12.4%
194,664
255,882
Little Rock, AR
6,903,382
0
0
6.8%
6.8%
9,867
15,276
Louisville, KY
44,176,486
60,000
398,000
9.7%
9.6%
67,818
240,679
Memphis, TN
5,374,329
0
0
15.9%
15.5%
21,497
-3,392
Dallas, TX
Ft. Lauderdale-Broward, FL
Houston, TX
Huntsville, AL
Miami-Dade, FL
18,556,376
0
0
18.9%
18.6%
31,867
134,980
Nashville, TN
13,178,272
11,446
894,000
10.1%
9.7%
150,444
212,566
Norfolk, VA
4,850,716
0
0
13.6%
13.1%
27,036
49,048
Orlando, FL
12,289,185
17,124
0
11.9%
11.4%
72,111
184,070
Raleigh/Durham/Chapel Hill, NC
14,945,874
242,969
242,969
5.0%
5.7%
115,908
179,004
Richmond, VA
16,308,828
0
321,500
9.5%
9.5%
3,464
14,608
Savannah, GA
Tampa Bay, FL
West Palm Beach/Palm Beach County, FL
South Total
803,516
0
0
13.8%
13.1%
5,853
-2,343
6,811,806
0
0
14.8%
14.9%
-5,492
2,738
11,979,918
0
0
19.8%
18.9%
65,587
71,379
367,930,306
404,969
4,791,201
13.4%
13.3%
661,317
837,290
* Q1-15 data displayed
8
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
United States - Downtown - All Classes (continued)
EXISTING
INVENTORY (SF)
JUNE 30, 2015
NEW SUPPLY
Q2 2015 (SF)
157,877,484
0
3,558,164
12.4%
12.2%
266,861
-219,331
Cincinnati, OH
18,379,005
310,000
365,000
14.7%
13.5%
467,985
544,931
Cleveland, OH
20,040,072
0
0
17.8%
16.8%
185,417
202,747
Columbus, OH
MARKET
UNDER
CONSTRUCTION
(SF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
YTD ABSORPTION
(SF) 2015
MIDWEST
Chicago, IL
19,674,367
0
150,000
9.5%
9.0%
46,832
23,267
Dayton, OH
5,105,238
0
58,000
27.3%
28.5%
-59,871
20,495
Detroit, MI
26,795,491
0
0
16.0%
15.3%
499,142
609,074
5,484,206
0
135,000
14.0%
11.6%
132,546
169,574
Indianapolis, IN
22,569,294
20,892
164,000
9.4%
9.4%
36,225
60,610
Kansas City, MO
34,157,148
0
0
12.8%
12.5%
88,479
379,179
Milwaukee, WI
18,603,481
0
0
9.7%
9.3%
43,251
173,633
Minneapolis, MN
33,879,008
0
1,822,000
13.4%
12.5%
299,037
71,754
6,460,005
0
0
8.3%
7.5%
52,301
-24,800
22,280,647
0
0
16.9%
16.6%
55,596
-213,994
Grand Rapids, MI
Omaha, NE
St. Louis, MO
St. Paul, MN
11,493,759
0
0
13.2%
13.0%
23,555
-62,845
402,799,205
330,892
6,252,164
13.1%
12.7%
2,137,356
1,734,294
Albuquerque, NM
3,158,324
0
0
26.7%
25.1%
50,797
-30,989
Bakersfield, CA
3,307,449
0
0
6.2%
7.2%
-33,874
-3,838
Boise, ID
4,177,362
0
466,022
11.8%
12.4%
-23,446
-13,675
Denver, CO
35,140,368
156,384
1,859,191
10.2%
11.0%
-135,176
-68,664
Fresno, CA
3,288,944
0
0
11.4%
11.7%
-8,625
8,036
Honolulu, HI
7,164,686
0
0
14.5%
14.3%
13,522
-8,667
Las Vegas, NV
5,018,065
0
129,000
11.4%
12.6%
-61,536
-89,356
Los Angeles, CA
32,258,544
0
771,892
18.8%
18.3%
141,700
97,000
Oakland, CA
17,255,313
0
0
9.0%
7.0%
347,121
344,147
Phoenix, AZ
20,324,074
0
0
20.6%
20.2%
85,615
44,125
Portland, OR
34,223,812
29,933
526,029
9.0%
9.0%
9,555
-70,026
3,363,048
0
0
13.3%
13.8%
-18,139
-2,168
12,507,771
0
0
15.7%
15.2%
64,094
70,579
Midwest Total
WEST
Reno, NV
Sacramento, CA
San Diego, CA
San Francisco, CA
San Jose - Silicon Valley, CA
Seattle/Puget Sound, WA
Stockton, CA
Walnut Creek, CA
West Total
U.S. TOTALS
9
9,984,263
0
320,000
16.2%
14.9%
127,609
266,020
88,944,277
62,050
5,199,587
6.7%
6.3%
299,519
1,208,805
8,346,400
0
0
15.5%
14.0%
104,183
59,012
56,528,261
428,677
7,057,113
10.5%
10.4%
45,229
380,526
8,221,819
0
306,000
12.4%
12.2%
9,730
153,887
12,346,542
0
0
15.8%
16.3%
-65,580
-54,826
365,559,322
677,044
16,634,834
11.5%
11.3%
952,298
2,289,928
1,988,154,385
5,709,358
40,031,194
12.0%
11.6%
7,749,764
7,076,293
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
United States - Downtown - Class A
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
AVG ANNUAL
QUOTED RENT
(USD PSF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
QUARTERLY
CHANGE
IN RENT
ANNUAL
CHANGE
IN RENT
NORTHEAST
Baltimore, MD
12,601,398
$22.72
12.0%
11.4%
71,598
3.4%
5.8%
Boston, MA
44,102,537
$53.18
11.7%
11.0%
292,615
1.4%
7.4%
Hartford, CT
New York, NY - Downtown Manhattan
New York, NY - Midtown Manhattan
6,771,455
$22.38
15.8%
15.7%
9,277
0.4%
-1.0%
81,123,149
$56.30
16.5%
16.0%
384,505
-0.1%
10.5%
201,481,717
$80.23
11.4%
10.5%
1,911,082
2.7%
5.6%
New York, NY - Midtown South Manhattan
36,062,986
$74.72
6.0%
5.7%
84,230
2.9%
11.3%
Philadelphia, PA
30,253,239
$28.91
10.3%
10.0%
94,904
0.5%
4.6%
Pittsburgh, PA*
17,820,982
$25.90
6.4%
6.3%
5,800
-0.2%
3.3%
Stamford, CT
13,473,953
$40.81
19.2%
18.9%
33,139
1.2%
6.5%
Washington, DC
89,461,253
$56.51
11.7%
11.4%
364,614
0.8%
1.4%
White Plains, NY
4,798,269
$32.06
17.3%
16.8%
24,186
-0.2%
1.6%
Northeast Total
537,950,938
$61.91
12.0%
11.4%
3,275,950
1.8%
6.4%
Atlanta, GA
31,186,813
$23.69
17.3%
17.1%
78,877
8.0%
9.5%
Austin, TX
7,260,706
$41.58
10.5%
10.8%
13,713
-2.5%
3.9%
Birmingham, AL
3,939,806
$20.55
18.5%
18.3%
5,592
-0.1%
-2.1%
Charleston, SC
1,009,994
$32.60
10.0%
7.7%
23,457
-1.2%
-4.0%
Charlotte, NC
15,765,596
$27.84
8.7%
8.4%
53,152
0.5%
11.7%
Columbia, SC
2,131,068
$21.48
11.0%
10.5%
11,509
0.7%
3.4%
SOUTH
Dallas, TX
22,377,614
$23.10
20.7%
20.3%
92,984
0.4%
0.7%
Ft. Lauderdale-Broward, FL
4,270,944
$35.47
15.4%
14.5%
26,487
1.6%
7.3%
Ft. Worth, TX
5,914,246
$28.95
16.8%
16.2%
39,792
0.2%
0.2%
Greenville, SC
2,290,167
$22.61
16.0%
14.7%
33,490
-0.5%
5.0%
30,288,063
$42.32
9.5%
10.0%
-142,547
0.9%
0.3%
943,189
$23.98
7.6%
7.6%
0
-1.7%
N/A
Jacksonville, FL
6,846,824
$20.65
16.8%
13.8%
203,097
1.6%
3.4%
Little Rock, AR
3,052,799
$17.99
8.4%
8.9%
-5,918
5.9%
12.5%
Louisville, KY
10,894,192
$21.94
9.5%
9.6%
12,083
4.3%
7.4%
Memphis, TN
2,026,788
$17.59
23.6%
22.3%
25,761
1.0%
2.7%
10,198,774
$41.25
17.6%
16.9%
43,695
0.8%
2.7%
Nashville, TN
4,637,054
$24.67
9.7%
9.5%
-8,020
1.1%
3.8%
Norfolk, VA
2,327,023
$22.14
12.3%
11.3%
23,289
-1.2%
-7.8%
Orlando, FL
5,683,167
$25.60
12.4%
12.2%
8,455
2.2%
2.4%
Raleigh/Durham/Chapel Hill, NC
7,617,445
$26.87
5.4%
7.0%
108,375
0.7%
3.2%
Richmond, VA
6,374,428
$24.36
7.5%
7.0%
34,452
-0.2%
-2.1%
Savannah, GA
645,713
$21.04
8.9%
8.0%
5,853
-1.3%
0.6%
4,999,685
$25.64
13.1%
13.2%
-4,096
-0.7%
5.8%
Houston, TX
Huntsville, AL
Miami-Dade, FL
Tampa Bay, FL
West Palm Beach/Palm Beach County, FL
South Total
3,837,756
$32.89
17.9%
17.3%
23,574
1.8%
-7.7%
196,519,854
$28.83
13.6%
13.3%
707,106
1.6%
3.3%
* Q1-15 data displayed
10
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
United States - Downtown - Class A (continued)
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
AVG ANNUAL
QUOTED RENT
(USD PSF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
QUARTERLY
CHANGE
IN RENT
ANNUAL
CHANGE
IN RENT
MIDWEST
Chicago, IL
61,837,979
$40.68
11.6%
11.6%
-13,303
-0.5%
4.0%
Cincinnati, OH
7,798,710
$22.58
14.6%
14.1%
303,678
0.2%
3.7%
Cleveland, OH
9,747,807
$20.41
15.7%
15.3%
38,592
-1.8%
-4.4%
Columbus, OH
8,906,062
$20.72
12.5%
12.2%
39,304
4.3%
4.9%
Dayton, OH
2,302,797
$17.92
29.5%
28.9%
13,730
0.3%
N/A
Detroit, MI
7,226,182
$23.76
12.3%
12.2%
12,887
1.4%
3.4%
Grand Rapids, MI
1,570,529
$22.34
16.7%
14.4%
36,006
9.4%
20.9%
Indianapolis, IN
9,501,787
$19.05
12.2%
12.1%
10,151
-0.3%
0.5%
Kansas City, MO
10,707,002
$18.90
18.3%
17.9%
35,796
-0.2%
0.1%
5,285,718
$27.92
9.0%
8.3%
7,470
1.9%
3.1%
Milwaukee, WI
Minneapolis, MN
13,805,787
$17.02
15.0%
13.9%
153,726
-1.3%
-0.9%
Omaha, NE
3,492,762
$20.38
3.7%
3.7%
0
0.0%
0.6%
St. Louis, MO
9,639,250
$17.97
13.6%
12.0%
154,198
-0.4%
-0.5%
St. Paul, MN
Midwest Total
2,773,960
$14.56
14.3%
12.2%
57,578
0.0%
0.8%
154,596,332
$28.29
13.1%
12.7%
849,813
-0.2%
2.2%
575,047
$20.25
23.6%
23.6%
0
0.5%
2.5%
WEST
Albuquerque, NM
Bakersfield, CA
788,282
$17.40
5.7%
5.9%
-1,632
0.0%
0.0%
1,941,427
$19.97
15.7%
5.4%
200,434
2.0%
-3.8%
Denver, CO
21,609,358
$35.58
12.5%
13.0%
-112,954
2.3%
9.1%
Fresno, CA
1,026,046
$24.60
7.9%
6.4%
15,407
0.0%
0.0%
Honolulu, HI
4,966,720
$35.88
14.2%
14.3%
-6,071
1.0%
1.0%
Las Vegas, NV
1,103,341
$31.32
16.2%
20.9%
-52,174
4.8%
-0.8%
Los Angeles, CA
18,098,000
$41.11
18.5%
17.8%
112,000
7.1%
10.2%
Oakland, CA
10,562,045
$38.88
7.7%
5.6%
224,394
5.2%
13.7%
Phoenix, AZ
9,467,221
$23.77
22.4%
23.0%
-59,167
2.5%
3.6%
Portland, OR
12,987,200
$27.89
9.5%
9.7%
-28,542
2.5%
6.6%
Boise, ID
Reno, NV
Sacramento, CA
San Diego, CA
San Francisco, CA
San Jose - Silicon Valley, CA
583,955
$24.37
12.6%
13.1%
-2,659
0.0%
3.7%
5,832,195
$31.92
17.0%
16.4%
34,415
1.5%
1.9%
7,257,266
$31.20
14.1%
13.0%
81,189
1.6%
4.8%
57,516,593
$65.26
7.1%
6.7%
217,911
1.6%
9.3%
3,494,393
$39.12
15.9%
14.9%
34,018
2.5%
6.5%
33,207,867
$37.43
10.0%
9.9%
37,647
1.5%
9.9%
Stockton, CA
2,790,574
$17.76
14.5%
15.0%
-12,252
-9.8%
-8.6%
Walnut Creek, CA
8,188,282
$32.40
16.1%
16.1%
300
4.2%
7.1%
201,995,812
$43.01
11.6%
11.3%
682,264
2.3%
8.4%
1,091,062,936
$47.69
12.4%
11.9%
5,515,133
1.7%
5.9%
Seattle/Puget Sound, WA
West Total
U.S. TOTALS / AVERAGES
11
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
United States - Suburban - All Classes
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
NEW SUPPLY
Q2 2015 (SF)
UNDER
CONSTRUCTION
(SF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
YTD ABSORPTION
(SF) 2015
NORTHEAST
Baltimore, MD
89,741,032
42,704
663,640
11.7%
11.3%
401,544
626,809
112,459,297
0
3,734,202
16.7%
16.7%
-142,706
847,789
Fairfield County, CT
39,578,509
0
0
14.5%
15.6%
-402,806
-862,799
Hartford, CT
12,784,662
0
0
11.9%
11.6%
49,765
72,796
Long Island, NY
74,588,098
20,000
0
10.4%
10.1%
212,858
122,107
New Hampshire Markets
17,760,017
0
118,684
15.2%
13.6%
277,887
277,887
Boston, MA
New Jersey - Central
84,985,841
0
1,507,000
13.8%
13.9%
-75,172
218,494
New Jersey - Northern
120,651,442
0
981,000
18.2%
18.2%
-38,341
-738,664
Philadelphia, PA
102,753,256
168,000
647,080
14.4%
13.8%
845,335
970,360
Pittsburgh, PA*
92,442,609
298,256
732,743
7.7%
7.8%
107,843
107,843
Washington, DC
288,973,700
481,658
4,023,476
17.7%
17.7%
119,920
-449,340
Westchester County, NY
38,235,679
297,000
0
14.6%
14.5%
-19,664
-137,496
1,074,954,142
1,307,618
12,407,825
14.9%
14.7%
1,336,463
1,055,786
Atlanta, GA
171,154,176
578,000
1,287,000
15.0%
14.4%
1,477,301
2,255,304
Austin, TX
60,253,871
656,603
1,476,306
10.6%
11.0%
369,705
658,236
Birmingham, AL
14,712,033
0
0
13.9%
14.4%
-90,633
-57,632
Northeast Total
SOUTH
Charleston, SC
Charlotte, NC
Columbia, SC
Dallas, TX
9,964,419
0
135,000
10.3%
9.4%
86,786
334,650
62,747,728
131,048
1,090,942
10.9%
10.8%
191,986
415,383
4,911,391
0
0
23.5%
22.5%
48,519
70,648
244,739,761
510,245
6,041,905
15.0%
14.5%
1,571,024
3,298,565
Ft. Lauderdale-Broward, FL
44,517,878
0
0
13.0%
12.7%
66,247
-117,239
Ft. Worth, TX
22,473,956
245,150
489,128
13.9%
13.7%
262,467
390,027
Greenville, SC
4,765,002
0
80,000
18.7%
17.4%
61,364
95,678
178,046,376
2,139,864
10,804,177
13.1%
14.0%
115,060
1,333,134
Huntsville, AL
19,147,310
0
0
13.0%
13.2%
-37,932
48,322
Jacksonville, FL
46,194,984
0
47,270
10.1%
10.0%
32,343
170,978
Houston, TX
Little Rock, AR
7,583,569
0
0
10.4%
9.8%
47,714
151,975
Memphis, TN
27,780,885
0
0
13.9%
13.9%
-9,876
313,906
Miami-Dade, FL
63,570,017
0
0
11.1%
11.0%
76,958
23,174
Nashville, TN
41,177,757
53,000
591,000
5.8%
4.7%
532,275
591,450
Norfolk, VA
34,514,064
74,600
84,360
12.0%
12.1%
27,282
88,494
Orlando, FL
54,940,017
0
0
13.1%
12.6%
267,825
441,169
Raleigh/Durham/Chapel Hill, NC
68,356,789
465,124
796,730
10.8%
10.3%
817,563
1,065,403
Richmond, VA
35,313,699
37,658
209,878
10.5%
10.4%
65,670
137,459
Savannah, GA
1,394,498
0
0
17.1%
16.7%
5,242
65,294
Tampa Bay, FL
57,601,546
0
307,335
15.8%
15.2%
312,875
723,330
West Palm Beach/Palm Beach County, FL
25,361,313
0
0
17.0%
15.5%
114,450
156,281
1,301,223,039
4,891,292
23,441,031
13.1%
12.9%
6,412,215
12,653,989
South Total
* Q1-15 data displayed
12
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
United States - Suburban - All Classes (continued)
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
NEW SUPPLY
Q2 2015 (SF)
UNDER
CONSTRUCTION
(SF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
YTD ABSORPTION
(SF) 2015
MIDWEST
Chicago, IL
156,451,190
0
0
17.0%
17.0%
76,548
-134,889
Cincinnati, OH
44,640,874
139,725
774,073
16.9%
16.4%
373,526
570,892
Cleveland, OH
54,405,481
0
80,000
13.1%
12.8%
172,460
179,925
Columbus, OH
43,872,427
43,000
575,840
10.0%
9.0%
122,698
161,412
9,145,009
0
100,000
21.2%
20.8%
33,770
70,179
138,001,461
150,006
514,522
16.0%
15.2%
1,426,353
1,989,536
Dayton, OH
Detroit, MI
Grand Rapids, MI
12,991,221
12,580
295,760
20.0%
22.9%
24,658
96,793
Indianapolis, IN
43,521,787
112,500
250,000
8.9%
8.0%
471,112
584,517
Kansas City, MO
59,620,465
0
957,000
11.6%
11.7%
-29,107
-82,029
Milwaukee, WI
33,346,986
300,200
0
12.0%
12.1%
160,743
136,535
Minneapolis, MN
81,394,670
0
765,980
12.7%
12.4%
260,095
279,825
Omaha, NE
21,478,894
0
294,316
10.4%
9.9%
75,566
170,290
St. Louis, MO
56,266,277
0
98,000
9.2%
9.0%
125,449
-258,687
755,136,742
758,011
4,705,491
13.9%
13.6%
3,293,871
3,764,299
10,965,528
0
0
18.7%
18.7%
8,517
93,264
6,150,350
0
108,810
5.7%
6.5%
-47,860
-32,551
Midwest Total
WEST
Albuquerque, NM
Bakersfield, CA
Boise, ID
17,186,733
0
0
13.5%
13.6%
-9,878
353,283
107,503,164
292,938
1,457,966
12.5%
12.1%
627,952
766,620
Fairfield, CA
5,065,448
0
0
19.1%
18.7%
21,341
60,103
Fresno, CA
17,612,190
0
50,000
14.0%
13.9%
13,238
-41,384
Denver, CO
Honolulu, HI
7,730,394
0
15,500
12.4%
11.8%
42,930
24,319
Las Vegas, NV
38,399,679
16,052
171,444
20.1%
19.7%
155,667
825,865
Los Angeles - Inland Empire, CA
20,421,424
0
0
16.0%
16.8%
-173,400
35,200
167,076,373
866,912
2,377,512
16.1%
15.9%
1,222,500
1,384,760
16,200,725
0
0
15.5%
13.6%
298,197
399,051
Los Angeles, CA
Oakland, CA
Orange County, CA
Phoenix, AZ
81,674,989
0
497,387
13.5%
13.5%
101,500
396,800
113,755,988
593,430
4,397,100
17.6%
17.5%
443,477
622,505
Pleasanton/Tri-Valley, CA
27,447,346
0
0
12.4%
12.8%
-98,174
96,189
Portland, OR
44,066,222
141,226
644,171
9.1%
9.1%
144,385
119,314
Reno, NV
9,752,688
0
0
14.1%
13.4%
72,243
68,196
Sacramento, CA
50,643,158
0
0
17.9%
17.5%
169,357
344,197
San Diego, CA
72,596,890
419,309
838,436
11.5%
11.8%
200,436
472,196
San Francisco Peninsula, CA
40,216,650
0
1,107,746
8.2%
7.7%
182,738
396,282
San Jose - Silicon Valley, CA
68,883,406
432,375
7,770,638
7.6%
6.4%
868,106
1,942,540
Seattle/Puget Sound, WA
73,672,731
0
1,720,693
10.1%
9.9%
124,325
188,682
Walnut Creek, CA
5,359,532
0
0
17.7%
18.2%
-29,501
-57,594
West Total
1,002,381,608
2,762,242
21,157,403
13.7%
13.4%
4,338,096
8,457,837
U.S. TOTALS
4,133,695,531
9,719,163
61,711,750
13.8%
13.6%
15,380,645
25,931,911
13
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
United States - Suburban - Class A
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
AVG ANNUAL
QUOTED RENT
(USD PSF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
QUARTERLY
CHANGE
IN RENT
ANNUAL
CHANGE
IN RENT
NORTHEAST
Baltimore, MD
32,364,723
$24.73
12.0%
11.2%
276,480
0.2%
1.8%
Boston, MA
49,316,662
$26.19
15.2%
16.1%
-452,024
-3.5%
0.0%
Fairfield County, CT
17,708,567
$33.98
13.1%
13.7%
-100,040
-2.6%
-9.5%
7,123,495
$21.06
11.4%
11.5%
-8,398
0.0%
0.2%
24,844,207
$30.91
12.1%
11.5%
151,930
-0.5%
0.9%
9,437,262
$19.85
17.2%
14.6%
245,967
-2.2%
N/A
New Jersey - Central
58,323,432
$26.84
12.3%
12.4%
-48,791
-0.3%
0.8%
New Jersey - Northern
87,834,184
$28.79
16.6%
16.8%
-178,333
-1.3%
-0.8%
Philadelphia, PA
52,552,740
$25.71
11.8%
11.1%
472,715
-1.0%
0.3%
Pittsburgh, PA*
17,498,963
$23.74
8.8%
9.2%
124,793
-11.7%
8.6%
Washington, DC
140,361,493
$32.29
18.3%
18.3%
337,685
-0.8%
-1.1%
18,102,621
$27.40
18.2%
17.9%
3,728
-0.1%
-1.1%
515,468,349
$28.50
15.1%
15.0%
825,712
-1.4%
-1.1%
Atlanta, GA
81,321,713
$25.13
13.0%
12.1%
1,280,295
1.5%
9.7%
Austin, TX
23,967,668
$32.87
10.8%
11.6%
427,927
4.2%
6.2%
9,281,152
$21.44
10.7%
10.9%
-17,582
3.2%
3.1%
Hartford, CT
Long Island, NY
New Hampshire Markets
Westchester County, NY
Northeast Total
SOUTH
Birmingham, AL
Charleston, SC
Charlotte, NC
Columbia, SC
Dallas, TX
Ft. Lauderdale-Broward, FL
Ft. Worth, TX
Greenville, SC
3,821,404
$25.79
8.1%
7.6%
30,850
2.3%
2.9%
20,822,123
$24.46
11.4%
11.5%
24,386
2.2%
7.0%
1,001,769
$17.14
17.6%
14.4%
31,379
1.0%
0.5%
102,147,021
$25.50
14.0%
13.4%
1,003,999
0.4%
2.4%
11,048,562
$29.17
12.2%
11.7%
36,794
1.0%
6.2%
3,755,579
$25.00
5.3%
5.0%
9,547
0.0%
2.9%
2,458,559
$19.22
11.2%
9.6%
38,490
0.2%
2.8%
85,290,726
$32.88
12.3%
13.9%
590,701
0.1%
0.0%
Huntsville, AL
4,037,079
$17.75
6.7%
6.7%
913
4.5%
N/A
Jacksonville, FL
9,207,858
$20.97
7.2%
6.9%
26,156
1.9%
7.0%
Little Rock, AR
2,843,202
$20.00
8.7%
8.3%
16,556
0.0%
6.7%
Memphis, TN
8,513,634
$20.60
6.8%
6.5%
21,949
-0.1%
-1.8%
Miami-Dade, FL
14,541,949
$32.11
11.5%
10.9%
53,745
0.5%
16.9%
Nashville, TN
15,170,069
$24.43
5.3%
3.2%
365,012
1.5%
4.4%
Norfolk, VA
10,983,000
$20.36
11.7%
11.6%
38,318
0.3%
1.6%
Orlando, FL
17,274,522
$22.10
13.9%
13.7%
33,540
0.8%
4.3%
Raleigh/Durham/Chapel Hill, NC
26,298,663
$22.87
10.0%
8.9%
681,771
0.1%
7.3%
Richmond, VA
13,939,107
$18.79
10.2%
10.1%
54,834
-1.4%
0.3%
Savannah, GA
488,384
$22.01
13.4%
12.0%
7,003
1.8%
-0.3%
19,207,226
$24.38
13.2%
12.3%
166,731
0.5%
3.3%
7,470,387
$30.60
14.6%
13.7%
71,421
3.2%
-2.5%
494,891,356
$26.35
12.0%
11.8%
4,994,735
1.1%
4.4%
Houston, TX
Tampa Bay, FL
West Palm Beach/Palm Beach County, FL
South Total
* Q1-15 data displayed
14
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
United States - Suburban - Class A (continued)
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
AVG ANNUAL
QUOTED RENT
(USD PSF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
QUARTERLY
CHANGE
IN RENT
ANNUAL
CHANGE
IN RENT
MIDWEST
Chicago, IL
79,348,545
$27.65
17.9%
17.7%
130,403
0.3%
1.2%
Cincinnati, OH
16,364,168
$20.73
15.8%
14.2%
378,969
1.6%
1.8%
Cleveland, OH
9,784,161
$20.15
10.5%
9.5%
95,710
-0.5%
-4.7%
Columbus, OH
18,239,783
$19.03
8.2%
8.0%
100,312
-0.9%
-3.3%
Dayton, OH
2,129,609
$21.08
21.9%
20.7%
24,918
-1.5%
N/A
Detroit, MI
36,195,269
$21.11
15.1%
14.0%
551,820
3.4%
4.8%
Grand Rapids, MI
1,479,763
$18.04
15.7%
44.8%
4,114
2.4%
3.1%
Indianapolis, IN
12,589,324
$18.87
11.1%
10.3%
93,455
0.2%
0.4%
Kansas City, MO
17,071,180
$20.91
9.9%
10.8%
-140,334
1.0%
1.9%
6,546,365
$22.40
8.6%
8.3%
285,499
0.0%
1.2%
27,777,390
$14.82
13.4%
12.8%
169,560
0.4%
1.3%
5,375,186
$26.03
2.7%
3.0%
8,425
2.1%
-1.2%
27,134,869
$21.97
9.1%
8.9%
58,738
-0.6%
0.5%
260,035,612
$22.31
13.6%
13.4%
1,761,589
0.6%
0.8%
Milwaukee, WI
Minneapolis, MN
Omaha, NE
St. Louis, MO
Midwest Total
WEST
Albuquerque, NM
Bakersfield, CA
Boise, ID
811,008
$21.30
4.3%
4.3%
0
0.0%
1.7%
2,836,404
$24.00
5.2%
7.5%
-65,246
0.0%
0.0%
5,854,337
$15.98
17.8%
16.1%
103,609
-4.6%
1.5%
Denver, CO
36,996,251
$26.11
11.5%
11.1%
218,722
1.2%
4.3%
Fairfield, CA
1,980,606
$25.61
18.9%
18.4%
10,818
-0.2%
0.0%
Fresno, CA
4,023,358
$25.80
18.1%
17.5%
22,019
0.0%
0.0%
Las Vegas, NV
5,122,696
$31.44
25.7%
24.4%
65,840
0.4%
0.4%
Los Angeles - Inland Empire, CA
5,074,649
$25.56
14.4%
14.3%
4,600
0.0%
0.0%
102,680,023
$35.88
14.3%
14.2%
618,000
2.4%
2.4%
3,682,927
$34.56
13.2%
9.7%
125,442
7.0%
17.6%
Orange County, CA
33,659,103
$29.76
14.7%
14.6%
31,500
3.3%
12.2%
Phoenix, AZ
32,643,518
$25.36
15.2%
14.5%
393,174
1.0%
5.0%
Pleasanton/Tri-Valley, CA
15,525,270
$32.64
13.4%
14.3%
-131,019
0.7%
12.4%
Portland, OR
11,519,797
$24.42
10.3%
9.8%
83,192
1.7%
3.0%
Los Angeles, CA
Oakland, CA
Reno, NV
965,801
$20.94
13.8%
12.3%
14,864
2.5%
0.7%
Sacramento, CA
14,292,709
$22.56
15.4%
13.9%
210,244
1.1%
1.1%
San Diego, CA
24,342,199
$37.20
11.4%
11.5%
129,360
1.0%
4.4%
San Francisco Peninsula, CA
23,083,521
$54.12
9.6%
9.4%
47,396
3.2%
18.4%
San Jose - Silicon Valley, CA
36,720,523
$48.72
8.7%
6.7%
909,540
3.6%
12.8%
Seattle/Puget Sound, WA
27,314,386
$36.24
10.2%
10.4%
-44,621
-1.3%
1.2%
Walnut Creek, CA
West Total
U.S. TOTALS / AVERAGES
15
737,964
$25.56
14.6%
14.3%
2,201
1.9%
0.0%
389,867,050
$34.15
12.9%
12.5%
2,749,635
1.9%
7.0%
1,660,262,367
$28.21
13.4%
13.2%
10,331,671
0.4%
2.9%
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
Absorption MSF
Completions MSF
Vacancy %
Absorption MSF
Completions MSF
Vacancy %
CANADIAN DOWNTOWN OFFICE ABSORPTION BY MARKET Q2-15
CANADIAN DOWNTOWN OFFICE UNDER CONSTRUCTION
CANADIAN DOWNTOWN OFFICE ABSORPTION BY MARKET Q2-15
CANADIAN DOWNTOWN OFFICE UNDER CONSTRUCTION
BY MARKET Downtown
Q2-15
Canadian
BY MARKET Q2-15 Office Under Construction
Canadian Downtown Office Absorption
By Market Q2-15
By Market Q2-15
544.3
544.3
Vancouver, BC
Vancouver, BC
236.4
236.4
Toronto, ON
Toronto, ON
167.7
Montréal, QC
167.7
Montréal, QC
65.3
Victoria, BC
65.3
Victoria, BC
53.4
Winnipeg, MB*
53.4
Winnipeg, MB
29.8
Waterloo Region, ON
29.8
Waterloo Region, ON
23.7
Edmonton, AB
23.7
Edmonton, AB
2.7
Regina, SK
2.7
Regina, SK
-18.8
Saskatoon, SK
-18.8
Saskatoon, SK
-24.1
Ottawa, ON
-24.1
Ottawa, ON
Calgary, AB -844.5
Calgary, AB -844.5
-1,000
-600
-200
200
600
-600
-200
200
600
-1,000
Thousands Thousands
Toronto, ON
Toronto, ON
3.8
Calgary, AB
Calgary, AB
AB
Edmonton,Edmonton,
AB
3.4
2.1
Montréal, Montréal,
QC
QC
1.1
Vancouver,
BC
Vancouver,
BC
Victoria, BC
0.3
Victoria,
BC
1.0
3.8
3.4
2.1
1.1
1.0
0.3
0.2
Regina, SKRegina,
0.2SK
Waterloo
Region,
Winnipeg,
MB*
0.1 ON
0.0
Waterloo Region,Winnipeg,
ON 0.0 MB
Saskatoon,
SK 0.0 SK
Saskatoon,
0.0
0.0
Ottawa,
Ottawa, ON
0.0 ON 0.0
0.0 0.5 0.0
1.0 0.5
1.5 1.02.0 1.52.52.03.02.53.53.0 4.0
3.5 4.0
Millions Millions
* - Q4-14 data displayed. These markets report semi-annually.
* - Q4-14 data displayed. These markets report semi-annually.
Canada - Downtown - All Classes
N.A. Downtown Markets:
UNDER
N.A.
Downtown
N.A. Downtown Markets:EXISTING
NEW SUPPLY
VACANCY
RATE
VACANCY Markets:
RATE
ABSORPTION (SF) YTD ABSORPTION
N.A.Markets:
Downtown
CONSTRUCTION What was the
Excluding renewals, of the leasesINVENTORY
signed this(SF)
quarter inQ2 2015 (SF)
trend in
Free
Rent
offered
by (SF) 2015
MAR 31, 2015
JUNE
2015 (in months)
Q2 2015
Excluding renewals, ofJUNE
the leases
signed
this
quarter
in
What
was
the 30,
trend
in Free Rent
(in months)
offered by
30, 2015
(SF)
CBD/downtown, did most tenants:
CBD landlords this quarter?
CBD/downtown, did most tenants:
CBD landlords this quarter?
MARKET
Calgary, AB
40,447,480
0
3,359,000
Edmonton,
AB
Expanded
17,311,801
23,683
2,090,493
Montréal, QC
49,610,579
0
1,124,698
0
0
9.8%
0
160,000
11.2%
11.1%
N/A,14.1%
8.6%
14.9%
-18,771
-59,088
2.7%
2.6%
236,367
838,597
7.2%
Expanded
Space, 21.0%
Space, 21.0%
Ottawa, ON
Regina, SK
N/A, 7.4%
Saskatoon, SK
Held
Held
Steady, 58.0%15,995,156
Steady, 59.3%
3,856,587
N/A, 6.2%
Less, 18.5%
N/A, 9.9%
0
10.7%
12.8%
9.4%
9.5%
23,683
-8,466
5.2%
167,670
364,167
Same,-24,128
63.0%
38,511
2,728
2,728
Less,
5.6%18.5%
Same,
9.9%61.7%
-844,538
-1,712,307
2,427,338
0
75,928,990
0
3,774,200
25,716,351
979,185
978,390
8.6%
544,276
481,155
Victoria, BC
4,875,360
-22,474
261,000
8.6%
7.3%
65,292
65,292
Waterloo Region, ON
3,908,755
0
43,280
13.0%
12.3%
29,780
58,062
Toronto, ON Contracted
Contracted
Space 13.6%
Space 13.6%
Vancouver, BC
Winnipeg, MB
CANADA TOTALS*
11,443,932
96,165
0
9.4%
9.7%
53,446
10,726
1,076,559
12,254,961
6.8%
7.2%
76,064
-80,364
Canada - Downtown - Class A
MARKET
Less, 16.0%
More, 9.9%
256,069,956
N.A.market
Downtown Markets:
* Totals include Halifax
N.A. Downtown Markets:
What was the trend for tenant Improvement allowances
What was the trend for tenant Improvement allowances
offered by CBD landlords this quarter?
offered by CBD landlords this quarter?
Less, 16.0%
More, 9.9%
EXISTING
INVENTORY (SF)
JUNE 30, 2015
Same, 61.7%
Same, 63.0%
AVG ANNUAL
QUOTED RENT
(CAD PSF)
N.A. Suburban Markets:
N.A. Suburban Markets:
Excluding renewals, of the leases signed this quarter in
Excluding renewals, of the leases signed this quarter in
your suburban market, did most tenants:
your suburban market, did most tenants:
Expanded
Space, 25.6%Expanded
Space,
25.6%ABSORPTION (SF)
VACANCY
RATE
VACANCY RATE
MAR 31, 2015
JUNE 30, 2015
Q2 2015
9.9%
-420,787
7.7%
6,811
N/A,
Calgary,
AB9.9% N/A, 8.6%
Edmonton, AB
27,568,453
$47.00
N/A, 6.1%
8.4%
8,535,654
$21.60
7.8%
Montréal, QC
23,073,808
$49.00
10,004,044
$36.75
6.9% Contracted 5.2%
Contracted
7.1% Space, 13.4%6.7%
Space, 13.4%
1,391,653
$22.70
4.7%
4.8%
Ottawa, ON
More, 12.3%
More, 12.3%
Regina, SK
Saskatoon, SK
N/A, 4.9%
QUARTERLY
CHANGE
IN RENT
Held
Steady, 54.9%Held
-6.0%
Steady,
56.1%
ANNUAL
CHANGE
IN RENT
-19.0%
0.0%
0.5%
394,844
0.0%
8.9%
20,164
-25.0%
0.0%
-1,678
0.0%
0.0%
570,560
$44.00
8.4%
10.2%
-9,898
0.0%
2.3%
Toronto, ON
43,020,330
$59.56
3.4%
2.8%
409,332
-2.3%
10.4%
Vancouver, BC
11,337,097
$55.87
7.5%
11.1%
502,599
-0.9%
5.4%
513,808
$35.00
0.5%
0.9%
-1,755
0.0%
0.0%
Waterloo Region, ON
1,561,288
$24.06
10.8%
10.2%
10,023
-0.1%
0.0%
Winnipeg, MB
2,715,593
$34.31
5.9%
7.7%
42,536
0.0%
1.7%
132,243,391
$48.49
6.2%
6.4%
962,182
-2.7%
1.4%
Victoria, BC
CANADA TOTALS* / AVERAGES
* Totals include Halifax market
16
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
Canada - Suburban - All Classes
MARKET
Calgary, AB
Edmonton, AB
EXISTING
INVENTORY (SF)
JUNE 30, 2015
NEW SUPPLY
Q2 2015 (SF)
25,921,745
0
UNDER
CONSTRUCTION
(SF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
1,810,387
10.4%
13.4%
-775,756
YTD ABSORPTION
(SF) 2015
-569,707
9,708,047
226,392
138,923
12.7%
14.2%
-80,737
-89,297
Montréal, QC
26,535,766
0
706,900
10.6%
9.4%
325,428
628,852
Ottawa, ON
21,717,774
0
230,000
12.2%
14.2%
-443,687
-457,275
Regina, SK
931,058
77,083
0
4.7%
10.0%
24,215
24,215
Toronto, ON
72,433,490
850,235
1,045,244
9.4%
9.8%
291,216
165,036
Vancouver, BC
30,187,348
0
1,014,529
11.5%
11.2%
103,905
75,393
Victoria, BC
3,817,040
0
76,000
10.9%
11.6%
-5,891
-5,891
Waterloo Region, ON
7,589,996
0
0
17.3%
18.1%
-55,601
-13,526
Winnipeg, MB
3,924,927
0
0
7.8%
7.7%
5,684
11,368
206,049,273
1,153,710
5,021,983
10.7%
11.4%
-554,264
-173,872
EXISTING
INVENTORY (SF)
JUNE 30, 2015
AVG ANNUAL
QUOTED RENT
(CAD PSF)
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
QUARTERLY
CHANGE
IN RENT
ANNUAL
CHANGE
IN RENT
Calgary, AB
12,828,979
$38.00
11.2%
-616,225
-2.6%
-11.6%
Montréal, QC
15,362,185
$31.00
10.8%
8.5%
350,042
0.0%
6.9%
Ottawa, ON
12,716,930
$31.25
13.1%
15.7%
-326,818
5.0%
-2.3%
CANADA TOTALS*
* Totals include Halifax market
Canada - Suburban - Class A
MARKET
Regina, SK
VACANCY RATE
MAR 31, 2015
16.0%
110,000
$29.00
0.0%
16.8%
-18,500
0.0%
5.5%
Toronto, ON
35,196,710
$31.09
9.3%
9.9%
468,315
-0.3%
-0.1%
Vancouver, BC
15,804,143
$35.86
13.4%
13.2%
28,272
3.9%
4.7%
898,167
$40.00
19.7%
19.0%
5,915
0.0%
0.0%
Victoria, BC
Waterloo Region, ON
CANADA TOTALS* / AVERAGES
3,895,520
$23.30
15.3%
18.0%
-105,612
-3.4%
5.5%
98,290,759
$32.50
11.3%
12.2%
-170,283
0.6%
-0.4%
* Totals include Halifax market
Canada | Office Investment
MARKET
Calgary, AB
CBD
SALES PRICE
(CAD PSF)
CBD
CAP RATE
SUBURBAN
SALES PRICE
(CAD PSF)
SUBURBAN
CAP RATE
N/A
N/A
$450.00
6.0%
Montréal, QC
$275.00
6.5%
$175.00
7.3%
Ottawa, ON
$360.00
6.0%
$165.00
7.0%
Regina, SK
$280.00
7.0%
$200.00
7.0%
Vancouver, BC
$500.00
5.0%
$338.00
6.1%
Victoria, BC
$300.00
6.0%
$280.00
6.5%
Waterloo Region, ON
$170.00
7.8%
$179.66
7.5%
CANADA AVERAGES*
$314.17
6.4%
$255.38
6.8%
* Straight averages used
17
North American Research Report | Q2 2015 | Office Market Outlook | Colliers International
United States | Office Investment
CBD
SALES PRICE
(USD PSF)
MARKET
United States | Office Investment
SUBURBAN
CBD
SUBURBAN
SALES PRICE
CAP RATE
CAP RATE
(USD PSF)
NORTHEAST
MARKET
CBD
SALES PRICE
(USD PSF)
(continued)
SUBURBAN
CBD
SUBURBAN
SALES PRICE
CAP RATE
CAP RATE
(USD PSF)
MIDWEST
Baltimore, MD
$50.00
7.8%
$162.00
7.3%
Chicago, IL
$350.00
5.5%
$200.00
7.5%
Boston, MA
$438.00
5.1%
$184.00
7.4%
Cincinnati, OH
$125.00
9.0%
$85.00
9.0%
Fairfield County, CT
$163.30
7.2%
$108.00
7.5%
Cleveland, OH
$105.00
N/A
$90.00
N/A
Hartford, CT
$110.00
8.0%
$116.21
9.0%
Detroit, MI
N/A
N/A
$243.00
7.9%
N/A
N/A
$179.00
7.8%
Indianapolis, IN
$101.33
9.0%
$130.00
8.8%
Long Island, NY
New York, NY - Downtown
$587.00
4.0%
N/A
N/A
Milwaukee, WI
$120.00
8.5%
$110.00
9.0%
New York, NY - Midtown
$1,573.35
4.7%
N/A
N/A
Minneapolis, MN
$136.00
N/A
$113.00
7.9%
New York, NY - Midtown
$1,562.50
4.0%
N/A
N/A
St. Louis, MO
$187.00
6.7%
$151.13
7.2%
Midwest Average**
WEST
Philadelphia, PA
Pittsburgh, PA*
$54.00
9.9%
$155.00
7.8%
Stamford, CT
$163.30
7.2%
N/A
N/A
Washington, DC
$625.00
5.3%
$220.00
6.5%
N/A
N/A
$167.87
N/A
Denver, CO
$501.22
6.4%
$160.36
7.6%
Fairfield, CA
Westchester County, NY
Northeast Average**
Albuquerque, NM
10.0%
$135.00
9.0%
8.4%
$138.25
8.4%
$145.00
8.5%
$175.00
8.0%
$46.71
4.0%
$124.50
N/A
$361.00
5.0%
$327.00
6.5%
Bakersfield, CA
N/A
N/A
$291.67
6.0%
$125.00
8.5%
$170.00
8.0%
Las Vegas, NV
N/A
N/A
$113.19
7.5%
Los Angeles - Inland Empire,
CA
N/A
N/A
$142.00
8.0%
Los Angeles, CA
$287.00
6.0%
$291.00
5.7%
Oakland, CA
$325.00
6.5%
$275.00
7.0%
N/A
N/A
$265.00
5.9%
$153.00
7.2%
$165.00
7.7%
N/A
N/A
$184.00
6.5%
Portland, OR
$218.70
5.2%
$148.93
6.2%
Sacramento, CA
$240.47
5.6%
$125.88
7.3%
San Diego, CA
$170.57
7.3%
$213.88
6.0%
San Francisco Peninsula, CA
N/A
N/A
$465.00
7.0%
N/A
N/A
$450.00
6.0%
Fresno, CA
SOUTH
$90.00
$146.76
Atlanta, GA
$175.00
7.2%
$180.00
6.8%
Austin, TX
$360.00
N/A
$250.00
N/A
Columbia, SC
$195.80
N/A
N/A
N/A
N/A
N/A
$188.00
7.0%
Ft. Lauderdale-Broward, FL
$176.58
6.0%
$125.87
6.8%
Ft. Worth, TX
$160.00
7.0%
$155.00
7.0%
N/A
N/A
$284.00
6.8%
Jacksonville, FL
$60.00
6.4%
$111.00
7.7%
Little Rock, AR
$88.00
9.0%
$117.00
9.0%
Miami-Dade, FL
$235.09
7.8%
$158.87
7.0%
Nashville, TN
$216.00
6.3%
$137.00
8.6%
Norfolk, VA
$120.00
7.5%
$150.00
7.0%
Orlando, FL
$275.00
7.0%
$205.00
7.3%
San Jose - Silicon Valley, CA
Savannah, GA
$160.00
9.0%
$120.00
9.5%
Seattle/Puget Sound, WA
$332.00
6.0%
$150.00
7.4%
Tampa Bay, FL
$160.00
5.0%
$90.00
6.0%
West Average**
$218.59
6.3%
$226.50
6.9%
West Palm Beach/Palm
Beach County, FL
$194.67
9.0%
$205.69
7.0%
U.S. AVERAGES*
$267.94
6.9%
$182.07
7.4%
South Average**
$184.01
7.3%
$165.16
7.4%
Dallas, TX
Houston, TX
OFFICE SERVICES | contact
FOR MORE INFORMATION
Cynthia Foster
President,
National Office Services
+1 212 716 3515
cynthia.foster@colliers.com
Andrew Nelson
Chief Economist | USA
+1 415 288 7864
andrew.nelson@colliers.com
Copyright © 2015 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While
every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No
responsibility is assumed for any inaccuracies. Readers are encouraged to consult their
professional advisors prior to acting on any of the material contained in this report.
18
Orange County, CA
Phoenix, AZ
Pleasanton/Tri-Valley, CA
* Q1-15 data displayed
** Straight averages used
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Pete Culliney
Director of Research | Global
+1 212 716 3698
pete.culliney@colliers.com
Jeff Simonson
Senior Research Analyst | USA
+1 760 930 7941
jeff.simonson@colliers.com
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North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International