Net absorption rose to 24.8 million square feet during the second quarter. Quarterly net absorption hasn’t hit that level since the last gasp of the dot-com bubble in 2000. Meanwhile, net absorption through the first six months of 2005 registered 40.8 million square feet, or more than double the 18.1 million square feet absorbed over the same period last year.
That’s all the more impressive, given highly uneven job gains over the past 12 months. What’s easy to forget, however, is that the labor market has produced roughly 3.7 million new payroll jobs since May 2003 — and a full 1.2 million of those were so-called "office-using" jobs, such as financial activities and professional and business services.
Locally, Grubb & Ellis data shows that leasing demand has been strongest in Washington, D.C. and its Virginia and Maryland suburbs. New York and Los Angeles, where overall vacancy hovers around 12 percent, round out that list. Reno, Nev., Long Island, N.Y., and Des Moines, Iowa, were the only three markets that posted negative absorption during the second quarter. Dallas-Fort Worth posted the nation’s highest metro vacancy at 23.6 percent by the end of June.
Grubb & Ellis isn’t alone in tracking a pronounced office leasing recovery. Manhattan-based real estate research firm Reis, Inc. also finds that the second quarter brought strong absorption and leasing activity. Though the Reis data is slightly different than the Grubb & Ellis numbers, both are moving in the same direction. According to Reis, there was 19.6 million square feet of absorption during the second quarter, up from only 10.3 million square feet in the first quarter.
