Rebound in Market for Suburban Office Space
November 14, 2013
The market for suburban office space — which saw vacancy rates spike above 30 percent in some areas of the country a few years ago — appears to be making up for big losses during the recession.
Since the beginning of 2012, suburban markets have accounted for 87 percent of office demand, according to data from CoStar Group. Many of these markets are in “premier” locations where technology and energy-related companies are driving the growth in demand. This follows a time period when the trend was many companies abandoning the suburbs in favor of consolidated buildings near public transit in urban areas.
Some of the suburban office markets driving the recovery include the Waltham-Watertown area in Boston; Northwest Austin; Bellevue, Wash., near Seattle; and Katy Freeway West in Houston, CoStar reports.
"Similar to the [second quarter], we’ve had increasing momentum in suburban office leasing," says Denny Oklak, chairman and CEO of Duke Realty. "The suburban office sector has continued to show more positive trends."
Much of the buzz in recent years has been about office demand shifting from suburban to downtown markets. However, “that’s not necessarily happening in spades,” says Walter Page, director of office research for CoStar.
“Suburban office absorption tends to perform well during economic booms and recovery periods, while [downtown] properties tend to perform better during downturns as companies take advantage of lower rental rates to secure space closer to the urban core,” CoStar Group notes.
Source: “Once Left for Dead, Suburban Office Making a Comeback,” CoStar Group (Nov. 11, 2013)
Updated: October 21, 2019