The increase pushed the vacancy rate down to 16.6 percent in the quarter from 16.8 percent in the second quarter, The Wall Street Journal reported.
Asking rents were unchanged in the third quarter at $24.09 per square foot per year, ending more than three years of quarterly declines, according to the survey of the top 64 U.S. office markets by Reis Inc., a New York-based commercial-real-estate research firm. Actual rents fell just two cents, or 0.1 percent, to $20.11.
So-called absorption — the net amount of occupied real estate — jumped to 11.2 million square feet in the third quarter, up from 7.6 million square feet in the second quarter and the most since the fourth quarter of 2000. That is a good sign for the U.S. economy as a whole, because employers lease more space when they are adding workers and dump space when they are laying them off.
The numbers are also good news for landlords, who have been battered by the economy's downturn — which caused vacancies to more than double from a low of 7.7 percent four years ago and rents to plummet by more than 20 percent from a high of $25.34 per square foot in the first quarter of 2001.
Landlords have come through what has been one of the worst periods ever in the office market, and did so without the rash of bankruptcies and foreclosures that plagued the market in the late 1980s and early 1990s, helping to send the U.S. economy into recession. This time, despite a record stretch where 10 of 11 quarters saw negative absorption, landlords have gotten by because of low interest rates and more discipline by developers.
Washington continued to be the tightest market in the country in the third quarter, with a vacancy rate of 7.7 percent. The nation's capital and San Bernardino, Calif., are the only two markets in the U.S. with single-digit vacancies.
Dallas's vacancy rate went down to 26.1 percent in the third quarter from 26.5 percent in the second, but it was still the highest in the country.
But in a sign that the recovery is taking hold nationwide, 46 of the 64 markets Reis surveyed saw more space occupied.
About eight million square feet of new construction became available in the third quarter, the most in five quarters, but the pace is still well below historical averages. The amount of new office space built this year, projected to be about 29 million square feet, will be the lowest in eight years. Reis projects 2005 will see about 34 million square feet of new space become available.
Reis projects that the vacancy rate will fall to 15.7 percent by the end of next year, with rents rising 1.1 percent.
