National Market Reports

National Office Market

The U.S. office market weakened during the third quarter of 2020 as the COVID-19 pandemic continued to impact the nation. Absorption was negative for the third quarter in a row; occupancy declined 35.4 million square feet during the third quarter of 2020. Asking rents rose 3.9% compared with the third quarter of 2019, driven in part by deliveries of top-quality product; rents tend to be a lagging indicator during market shifts. Vacancy increased 110 basis points over the past 12 months. Approximately 8.6 million square feet of new product delivered during the third quarter of 2020. The amount of space under construction reached a new cyclical high and presents a challenge for asset owners in the year ahead. However, the potential for a new wave of coronavirus infections during the fall and winter, and the pace of the ongoing economic recovery, will be the greatest influences on market conditions during the remainder of the year and in early 2021.

National Industrial Market

The U.S. industrial market continued its expansion in the third quarter of 2020. Demand increased, asking rents edged higher and vacancy remains low, although it did tick up during the quarter. Absorption rose in the third quarter after decelerating during the previous quarter in response to a lack of available product as well as concerns about the global economy amid the COVID-19 pandemic. The industrial construction pipeline remained robust in the third quarter as developers continue to address the persistent demand for modern distribution space—which has been powered by the accelerating use of e-commerce services during the pandemic. The emphasis placed on logistics, warehouses and distribution centers during the pandemic has persisted even as the economy has begun to recover and some Americans have returned to work from furloughs and layoffs. However, the recovery has showed signs of slowing, and a second wave of the coronavirus could lead to further economic disruption.