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1、U.S.Office Markets:Performance&ProspectsU.S.Research Report|March 2023Office ServicesKevin MorganPresident,Northwest Region&Head of Agency Leasing|U.S.+1 775 823 Research Steig SeawardSenior Director,National Research|U.S.+1 303 779 Research Stephen NewboldDirector,National Office Research|U.S.+1 20
2、2 534 Occupier Services Scott NelsonCEO,Occupier Services|Global+1 470 386 Occupier Services Chris ZlockiHead of Client Experience Executive Vice President,Occupier Services|Global+1 313 595 Office ServicesMichael LirtzmanHead of Office Agency Leasing|U.S.+1 312 612 2Colliers U.S.Research ReportIntr
3、oduction .4Market Cycle Analysis .12Office Market Rankings.13Economic Metrics .14Albuquerque.16Atlanta.18Austin.20Baltimore.22Birmingham.24Boise.26Boston.28Charleston.30Charlotte.32Chicago.34Cincinnati.36Cleveland.38Columbia.40Columbus.42Dallas-Fort Worth.44Dayton.46Denver.48Detroit.50Fort Lauderdal
4、e.52Grand Rapids.54Greenville-Spartanburg.56Hartford.58Houston.60Indianapolis.62Jacksonville.64Kansas City.66Las Vegas.68Los Angeles.70Memphis.72Miami.74Milwaukee.76Minneapolis.78Nashville.80New Hampshire.82New Jersey.84New York.86Norfolk.88Oakland.90Omaha.92Orange County.94Orlando.96Palm Beach.98Ph
5、iladelphia.100Phoenix.102Pittsburgh.104Portland.106Raleigh.108Reno-Sparks.110Richmond.112Sacramento.114Salt Lake City.116San Diego.118San Francisco.120San Jose.122Seattle .124St.Louis.126Stockton.128Tampa.130Washington,D.C.132Methodology&Sources.134Table of Contents32023 Top Office Markets|Introduct
6、ionIntroduction As the economy is predicted to enter a mild recession near the third quarter this year,2023 will be a year of discovery for the U.S.office market,navigating uncharted waters after three years of pandemic-induced market adjustments.Along with emerging signs of stabilization are signif
7、icant debate and speculation about what lies ahead,as the return to the office remains slow.The sectors series of challenges could result in important structural shifts in the years to come.Is a market correction ahead?Firms continue to recast their property strategies,focusing on how much future sp
8、ace will be needed and where it should be.Tenant downsizing is increasing,with space reductions of at least 20%to 30%by large occupiers.Uncertainty in the economy continues to cloud the picture,further impacting the timing of such decisions.Existing lease commitments will also restrict the ability t
9、o implement change.This report provides an overview of the national context and outlook,followed by an analysis of current economic and real estate trends in 59 prominent U.S.office markets.We also assess the outlook for each market through year-end 2023 and determine their position in the office cy
10、cle,evaluating whether local trends are declining,stabilizing,or exhibiting signs of recovery.4Colliers U.S.Research ReportU.S.Office Market:Current Context 2022 closed in a downbeat fashion for the office market,with year-end numbers providing little encouragement.Net absorption turned negative in
11、Q4 2022,vacancy rose,and sublease space hit a new record high.As of the fourth quarter,the U.S.office vacancy rate sits at 15.7%,30 basis points higher than in Q3 2022.Although the rate is still below the peak of 16.3%during the Global Financial Crisis,it is projected to reach that level by mid-2023
12、 if the current pace continues.In our national survey,43%of the metro office markets reported positive net absorption,down from 52%in the third quarter.However,national office absorption totaled negative 14.1 million square feet in the fourth quarter,wiping out the modest gains earlier in the year a
13、nd resulting in an annual net absorption total of negative 8.6 million square feet.Reflecting this shift,12 metro markets posted negative absorption of more than 500,000 square feet.Occupancy losses in the fourth quarter were led by New York City(negative 4.3 million square feet),Greater Los Angeles
14、(negative 1.8 million square feet),and Minneapolis(negative 1.5 million square feet).Conversely,positive absorption was led by Baltimore,Orlando,and Salt Lake City.516-50-40-30-20-Q4 2018Q2 2019Q4 2019Q2 2020Q4 2020Q2 2021Q4 2021Q2 2022Q4 2022Vacancy%Millions SFAbsorption(MSF)N
15、ew Supply(MSF)Vacancy Rate(%)U.S.Office Market:Supply,Demand&VacancySource:Colliers“.national office absorption totaled negative 14.1 million square feet in the fourth quarter,wiping out the modest gains earlier in the year and resulting in an annual net absorption total of negative 8.6 million squa
16、re feet.”52023 Top Office Markets|OverviewAlthough asking rates are relatively stable,the difference between asking and effective rents is substantial due to generous concessions.For instance,in several major markets,tenants can receive tenant improvement allowances of$100 or more per square foot an
17、d 12 months of rent abatement in a new 10-year lease on Class A space.The U.S.office market now has a record 242.7 million square feet of sublease space available,up from 232.8 million square feet in Q3 2022 and considerably higher than the peak of 143.3 million square feet in Q2 2009 during the pre
18、vious cycle.As companies continue to assess real estate needs post-COVID,sublease space will remain an attractive,short-term,cost-competitive option until there is greater clarity on future business direction.Office construction is continuing to slow down,and the 100.6 million square feet underway i
19、s 39%below the peak of 164 million square feet in Q3 2020.The New York metro area has the most significant amount of ongoing construction,with 15.3 million square feet,followed by the San Francisco Bay Area,primarily focused on Silicon Valley,with 10.7 million square feet,and Seattle,with 7.6 millio
20、n square feet.U.S.Office Market:Available Sublease SpaceU.S.Office Market:Quarterly Under Construction TotalsSource:Colliers/CoStarSource:Colliers02040608000Q2 2008Q4 2008Q2 2009Q4 2009Q2 2010Q4 2010Q2 2011Q4 2011Q2 2012Q4 2012Q2 2013Q4 2013Q2 2014Q4 2014Q2 2015Q4 2015Q2 2016Q4
21、 2016Q2 2017Q4 2017Q2 2018Q4 2018Q2 2019Q4 2019Q2 2020Q4 2020Q2 2021Q4 2021Q2 2022Q4 2022MSF0204060800180Q2 2006Q4 2006Q2 2007Q4 2007Q2 2008Q4 2008Q2 2009Q4 2009Q2 2010Q4 2010Q2 2011Q4 2011Q2 2012Q4 2012Q2 2013Q4 2013Q2 2014Q4 2014Q2 2015Q4 2015Q2 2016Q4 2016Q2 2017Q4 2017Q2 2018Q4 2018Q2
22、 2019Q4 2019Q2 2020Q4 2020Q2 2021Q4 2021Q2 2022Q4 2022Under ConstructionHistoric AverageMSF6Colliers U.S.Research ReportTop 10 Office Markets:Sublease Availability Rates Q4 2022Top 10 Office Markets:Class A CBD Sublease Space Rental Discount Q4 2022Source:ColliersSource:ColliersU.S.Office Market:Key
23、 Observations for 2023 The U.S.office market remains relatively stagnant,but structural changes are taking shape.Tenants are seeking new buildings with high-end amenities to attract and retain talent.But premium Class A assets are in short supply.Roughly 1.4 billion square feet of leases expiring be
24、fore 2026 could result in nearly 300 million square feet of space being returned to the market.Repositioning and adaptive reuse opportunities,partly driven by ESG mandates,will prove fruitful.Capital is avoiding the office market today but expected lower interest rates in the future will attract inv
25、estment.Owners and investors must navigate the changing sources of market demand,demographic trends,and lower occupancy requirements.Meanwhile,they should prepare to hold assets and deal with refinancings,capital,and operational needs.0%2%4%6%8%10%Washington D.C.ChicagoAtlantaDallasHoustonAverageMan
26、hattanBostonLos AngelesSeattleSan Francisco0%10%20%30%40%50%DallasSan FranciscoBostonSeattleWashington D.C.AverageAtlantaManhattanLos AngelesChicagoHouston72023 Top Office Markets|OverviewU.S.National Office Forecast Vacancy:The U.S.vacancy rate is rising and is expected to surpass the prior cyclica
27、l peak over the year ahead.Increased building obsolescence will result in greater structural vacancy.Demand:Net absorption has been marginally positive in four of the past five quarters.A significant uptick looks unlikely because of business and economic uncertainty.As the tech sector retrenches,lea
28、sing will decline unless another tenant sector takes the lead.Sublease Space:Sublease space has reached a record high and is expected to rise as more firms cut space and put the surplus on the market.Construction:Development,already down 40%from this cycles peak,will continue to fall due to a downtu
29、rn in pre-leasing and fundamentals that do not support speculative projects.Rents:Asking rents are holding up,but with generous concessions.The prevalence of lower-cost,high-end sublease options will place further pressure on direct rates.U.S.Economic Context and OutlookCurrent economic headlines re
30、main dominated by overly high but declining inflation and the Federal Reserves(Fed)policy response.For example,Februarys Consumer Price Inflation(CPI)the principal measure used by the Bureau of Labor Statistics(BLS)reached a 6%annualized rate,down from the 40-year high of 9.1%in June 2022 but still
31、significantly elevated.CPI is expected to continue to fall.Oxford Economics projects that CPI will be around 4.5%at the close of 2023.This is still elevated compared to the 10-year average of 1.8%from 2011 to 2020.To curb inflation,the Fed has continued to raise interest rates,by 50 basis points in
32、December and 25 basis points in February.Additional 25-basis-point rate increases are expected at their March,May,and June meetings,raising the terminal rate to 5.25%5.50%by midyear.However,the U.S.economy grew at a robust 2.9%annual pace in the fourth quarter of 2022.Still,the U.S.faces tough odds
33、of repeating its performance in 2023 as rising interest rates sap growth and threaten to instigate a recession.Oxford Economics projects real GDP growth of just 0.1%in 2023,rising to 0.8%in 2024.But the labor market remains remarkedly resilient,adding 311,000 jobs in February 2023 and averaging over
34、 350,000 jobs over the last three months.Over 80%of the markets tracked have eclipsed their pre-pandemic office employment levels.Austin leads all markets at 23.7%growth,followed by Jacksonville,Raleigh,and Dallas-Ft.Worth.“.the U.S.economy grew at a robust 2.9%annual pace in the fourth quarter of 2
35、022.Still,the U.S.faces tough odds of repeating its performance in 2023 as rising interest rates sap growth and threaten to instigate a recession.”8Colliers U.S.Research ReportMetro Office Employment-%Change from February 2020Source:Oxford Economics-5%0%5%10%15%20%25%OmahaNorfolkKansas CityOaklandMi
36、lwaukeeHartfordDaytonRichmondColumbusMinneapolisReno-SparksClevelandOrange CountySt.LouisSacramentoCincinnatiGrand RapidsWashington D.C.ChicagoNew YorkPittsburghBaltimoreLos AngelesNew JerseyPortlandColumbiaSalt Lake CityPhiladelphiaMemphisBirminghamDetroitBostonSan FranciscoHoustonLas VegasGreenvil
37、le-SpartanburgUnited StatesPhoenixStocktonSan JoseSan DiegoIndianapolisCharlestonPalm BeachDenverBoiseFort LauderdaleOrlandoMiamiSeattleCharlotteAtlantaTampaNashvilleNew HampshireDallas-Ft.WorthRaleighJacksonvilleAustin92023 Top Office Markets|OverviewWest Coast markets dominate projected GDP growth
38、 for 2023,led by San Jose,at 2.6%.Los Angeles,Sacramento,San Diego,San Francisco and Seattle are also in the top 10.Texas markets are projected to thrive as well,with Houston and Austin coming in at Nos.4 and 5,respectively,and Dallas-Ft.Worth at No.13.Projected Metro GDP Growth:2023-1.5%-1.0%-0.5%0
39、.0%0.5%1.0%1.5%2.0%2.5%3.0%HartfordNorfolkClevelandSt.LouisDaytonChicagoCincinnatiMilwaukeeNew JerseyAlbuquerquePalm BeachDetroitKansas CityMemphisIndianapolisOmahaGrand RapidsPittsburghCharlestonGreenville-SpartanburgPhiladelphiaFort LauderdaleColumbusSalt Lake CityBirminghamNashvilleRichmondTampaC
40、olumbiaStocktonUnited StatesMinneapolisNew YorkCharlotteBaltimorePhoenixAtlantaWashington D.C.Orange CountyReno-SparksBoiseJacksonvilleRaleighPortlandMiamiDenverNew HampshireDallas-Ft.WorthOaklandOrlandoSacramentoSan DiegoBostonLos AngelesLas VegasAustinHoustonSeattleSan FranciscoSan JoseSource:Oxfo
41、rd Economics10Colliers U.S.Research ReportTrends to Watch in 2023 U.S.Slides into a Mild Recession:The Feds swift and aggressive monetary policy,persistent inflation,and slower global demand will likely push the economy into a mild recession by Q3 2023.Another 75 basis points of rate hikes are in st
42、ore for the remainder of 2023,and the Fed wont begin to reverse course despite moderating inflation until early 2024.Inflation Poised to Drop Significantly:Easing supply chain challenges and falling energy,gas,and commodity prices will relieve inflationary pressures.Inflation can fall significantly
43、because of lower rents and housing costs,moderating healthcare costs,and retailers unloading overstocked inventory.Labor Constraints Ease:Strong employment growth propelled the economy in 2022,but the labor market will begin to stall in 2023,and job growth should turn negative by summer.Although sti
44、ll low by historical standards,the unemployment rate will rise above 4.5%,and wage growth will drop closer to the Feds 2%target range.Consumer Spending Runs Out of Steam:As the pandemic-boosted household savings rate falls below pre-pandemic levels,households will likely curb spending,particularly o
45、n higher-priced goods,as the labor market deteriorates and wage growth retreats.Residential and Business Investment Weaken:Despite stabilized 10-year Treasury and 30-year mortgage rates,single-family sales residential investment will remain tepid.Easing pent-up demand,higher borrowing costs,and tigh
46、tening lending standards will reduce business investment as companies cut expenses in a contracting economy.112023 Top Office Markets|OverviewMarket Cycle Analysis The Market Cycle Forecast analyzes occupancy movements and rental growth rates in 59 Metropolitan Statistical Areas(MSAs).Starting in th
47、e Recovery Phase at the bottom left of the cycle(see chart below),occupancy has reached its trough due to negative demand or oversupply of new office developments.Traditionally,the recovery phase begins when the development pipeline empties,and vacancy stabilizes.In the relief stage,excess space is
48、absorbed,vacancy rates fall,and rental rates firm.As the market progresses into the optimism stage of the recovery,landlords slowly begin to increase rates.When the market reaches the Expansion Phase,demand rises,and lease rates follow suit.As a result,markets tend to spend more time in the expansio
49、n phase than other phases during a complete real estate cycle.Construction starts when lease rates have reached an equilibrium justifying new development.Although new construction will have begun,vacancy rates will decrease during this period,as new inventory is still under development and existing
50、supply can no longer keep up with demand.The market moves into the early stages of the Imbalance Phase once the supply of new developments overtakes current demand.This key moment is often missed as the market appears extremely healthy.However,as the market moves deeper into the troubling stage of t
51、he imbalance phase,supply begins to outpace demand noticeably,vacancy rates rise,and rental rates moderate before ultimately contracting.The Consolidation Phase begins when new supply continues to be delivered,experiencing little-to-no net absorption.As a result,rents decline further as the vacancy
52、rate rises.This market cycle phase ends when development activity no longer exists,or demand begins to outpace supply again.Baltimore,Birmingham,Boston,Charlotte,Columbia,Grand Rapids,Las Vegas,Memphis,Milwaukee,New Hampshire,New York,Norfolk,Oakland,Orlando,Phoenix,Pittsburgh,Reno,Sacramento,San Jo
53、se,Stockton,Tampa,U.S.Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment Fort Lauderdale,Miami,Palm B
54、eachAtlanta,Austin,Cincinnati,Cleveland,Columbus,Dayton,Denver,Detroit,Hartford,Indianapolis,Kansas City,Los Angeles,New Jersey,Orange County,Philadelphia,Richmond,St.Louis,Washington D.C.Chicago,Houston,Minneapolis,Portland,San Francisco,SeattleDallas-Fort WorthAlbuquerque,Boise,Charleston,Greenvil
55、le-Spartanburg,Jacksonville,Nashville,Omaha,Raleigh,Salt Lake City,San DiegoMarket Cycle|Year-end 2023 Forecast12Colliers U.S.Research ReportOffice Market RankingsBased on the strength of the labor market and the resilience of the U.S.consumer,we anticipate that the onset of the recession will be po
56、stponed until Q3 of 2023.According to Oxford Economics,in 95%of metros GDP will decrease in Q2 and Q3,and 24 of the 59 markets analyzed in this report will have negative GDP growth in 2023.Tech markets and areas with significant tourism are expected to have the healthiest growth.At the same time,lar
57、ge manufacturing metros in the Midwest will face the most substantial GDP decline,similar to that in 2022.Despite the slowdown,Oxford Economics predicts that metro employment growth in 2023 will surpass metro GDP growth by a wide margin.Metros such as San Francisco are still recuperating from their
58、pandemic-related job losses,and others poised to benefit from the ongoing robust spending on leisure and travel,such as Las Vegas and Orlando,are leading in job growth.While Pacific tech hubs are now facing challenges,they are expected to lead major metro GDP growth over the medium term,and Austin i
59、s expected to be at the forefront of job growth.In this report,we ranked each city on a scale of one to 59 across five metrics to better determine those best positioned for a sustained recovery.The growth metrics are as follows:GDP By comparing GDP growth rates,we learn the size of the local economy
60、 and how it is performing.Real GDP growth is often used as an indicator of the economys general health.The higher the rate of growth,the stronger the local economy.Employment While job growth is essential to all sectors of the economy,it is imperative to the office sector,as the demand for office sp
61、ace is tied directly to job growth.Spending As strong spending figures point towards medium and long-term confidence in the markets overall health,consumer spending is a key economic barometer.Population Substantial population gains are a positive indicator of a metro areas comparative advantages(qu
62、ality of life,climate,recreation,and economic vitality).While employees have historically moved to where the jobs are,in a transformational shift,employers are now moving to the workforce.Home Prices While home price appreciation is widely viewed as a positive indicator of an areas desirability,year
63、s of rampant growth raise concerns about affordability,particularly for the East and West Coast markets.132023 Top Office Markets|Overview2023 Economic Metrics Top 59 U.S.Office MarketsGDP Growth&RankEmployment Growth&RankPopulation Growth&RankSpending Growth&RankHouse Prices Growth&RankAlbuquerque-
64、0.5%490.6%570.0%480.2%540.2%21Atlanta0.3%241.2%381.2%101.8%90.2%20Austin1.3%52.6%31.8%22.4%3-0.8%30Baltimore0.2%261.5%24-0.1%500.5%48-4.4%50Birmingham0.0%350.9%490.3%390.5%493.9%1Boise0.4%201.2%352.2%11.7%11-4.0%46Boston1.0%81.3%310.9%221.9%5-2.7%41Charleston-0.2%392.0%80.7%281.4%200.1%22Charlotte0.
65、2%272.4%41.4%61.9%63.2%2Chicago-0.6%540.6%58-0.2%550.2%55-0.2%25Cincinnati-0.5%531.3%300.2%440.8%391.8%11Cleveland-0.7%571.0%47-0.3%580.2%532.0%8Columbia0.1%311.6%18-0.1%510.8%383.2%4Columbus-0.2%371.2%400.8%251.1%301.5%15Dallas-Ft.Worth0.7%131.4%271.3%81.4%21-0.3%26Dayton-0.6%550.8%55-0.3%570.0%581
66、.0%16Denver0.7%151.2%361.1%141.6%13-2.9%43Detroit-0.4%481.6%210.0%491.0%31-0.1%24Fort Lauderdale-0.2%380.6%560.5%330.6%46-2.0%37Grand Rapids-0.3%431.7%160.5%321.5%141.9%10Greenville-Spartanburg-0.2%401.0%460.4%380.9%343.2%3Hartford-1.2%591.2%41-0.4%590.6%44-1.9%35Houston1.4%41.7%151.5%51.9%81.5%13In
67、dianapolis-0.3%450.9%500.4%370.8%402.3%5Jacksonville0.4%190.9%511.1%160.7%43-0.9%32Kansas City-0.4%471.1%450.5%350.8%370.6%17Las Vegas1.2%62.3%50.7%271.2%28-8.0%57Los Angeles1.0%71.7%140.2%431.2%27-3.1%45Memphis-0.4%461.2%370.1%460.5%471.5%14Miami0.7%162.0%100.5%340.4%51-2.5%3914Colliers U.S.Researc
68、h ReportGDP Growth&RankEmployment Growth&RankPopulation Growth&RankSpending Growth&RankHouse Prices Growth&RankMilwaukee-0.5%521.3%29-0.2%540.3%520.5%18Minneapolis0.1%291.5%250.7%301.9%7-1.7%33Nashville0.0%341.5%221.1%131.4%182.0%6New Hampshire0.7%141.3%330.2%451.3%26-0.7%29New Jersey-0.5%511.1%430.
69、3%40-0.2%59-1.9%36New York0.1%281.8%131.1%121.7%12-1.7%34Norfolk-0.8%581.0%48-0.2%520.1%57-0.3%27Oakland0.8%111.9%110.8%241.4%19-7.3%56Omaha-0.3%440.8%530.9%210.9%330.4%19Orange County0.4%211.4%280.2%421.4%17-3.0%44Orlando0.8%122.0%91.6%31.3%240.0%23Palm Beach-0.5%500.4%591.1%170.1%56-2.8%42Philadel
70、phia-0.2%411.3%320.1%470.7%42-0.9%31Phoenix0.3%251.8%121.0%191.4%15-7.0%55Pittsburgh-0.2%421.6%19-0.2%560.9%361.7%12Portland0.6%172.1%60.9%201.7%10-4.1%48Raleigh0.5%181.6%201.1%181.3%252.0%7Reno-Sparks0.4%221.2%341.3%91.0%32-8.5%58Richmond0.0%321.6%170.6%311.2%29-0.6%28Sacramento0.8%101.2%390.2%410.
71、9%35-6.2%53Salt Lake City-0.1%360.8%541.6%41.4%16-2.2%38San Diego0.9%91.5%230.5%361.3%22-4.0%47San Francisco2.1%23.1%11.1%152.6%2-7.0%54San Jose2.6%12.8%21.1%112.6%1-5.0%52Seattle 1.8%32.0%71.4%72.1%4-4.1%49St.Louis-0.7%561.1%44-0.2%530.4%502.0%9Stockton0.1%300.9%520.9%230.7%41-8.7%59Tampa0.0%331.1%
72、420.8%260.6%45-2.5%40Washington,D.C.0.3%231.4%260.7%291.3%23-4.8%51152023 Top Office Markets|OverviewWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate4.6%0.4%60.2%AlbuquerqueNew MexicoMarket Overview According to Oxford Economics,Albuquerque had econ
73、omic growth of 1.8%in 2022,following 5.1%growth in 2021,which helped the metro economy recover from the pandemics effects.However,between 2023 and 2027,Oxford Economics suggests that its economy will grow at an average annual rate of 1%,a half percentage point lower than the U.S.average.Meanwhile,em
74、ployment is predicted to grow by 0.5%per year on average for the next five years,following growth of 3.5%in 2022.Albuquerques population is anticipated to remain relatively constant over the next five years until 2027.Since peaking in early 2017 at 19.5%,the overall vacancy rate has followed a downw
75、ard trajectory and stood at 12.6%at year-end.A flight-to-quality continues to emerge as tenants compete for a limited supply of Class A space.Class A properties finished the year at 12.2%,better than Class Bs 14%.Lease rates have retreated from their record level set in the early stages of the pande
76、mic.Overall,Class A lease rates ended the year at$22.34 per square foot per year,with Uptown and North I-25 Corridor commanding the highest rents.With no meaningful new construction over the last decade-plus,building renovations will remain prevalent for landlords seeking quality credit tenants.Tena
77、nt Opportunities Lease rates have stabilized despite the fall in vacancy rates and are off their early pandemic peak.Over the next five years,low home price appreciation could spur migration from more expensive markets.Landlords are increasing the amenities offered,aiding tenants trying to return em
78、ployees to the office.Tenant Challenges Tenants seeking discounted sublease space are seeing limited opportunities hit the market.Rising construction costs combined with tenants resistance to extend lease terms beyond five years and tightening cash flows for some landlords will force more tenants to
79、 pay coming out of pocket for build-out costs.Albuquerques tight labor market will continue to create challenges for HR teams to attract and retain talent.16Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-e
80、nd 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 Forecast0%2%4%6%8%10%12%14%16%18%20%(100,000)(50,000)050,000100,000150,000200,000200212022Net AbsorptionDeliveriesVacancy RateHistorical
81、 Metrics|Last 20 yearsCurrentHighLowVacancy Rate12.6%19.5%12.6%Qtr/Year it happenedQ4 2022Q1 2017Q4 2022Class A Lease Rates$22.34$24.61$19.52Qtr/Year it happenedQ4 2022Q3 2020Q2 2018Average Annual Growth and Rank2023Growth&Rank2023-2027 Growth&RankGDP-0.5%1.0%4957Employment0.6%0.5%5747Population0.0%
82、0.1%4849Spending0.2%1.4%5446House Prices0.2%0.3%2156Absorption,New Supply&VacancyTotal InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate14,231,81461,336 12.6%13.3%0.2%0$22.34$20.26$23.49 Imbalanceof supply and demand;Rental value fallingExp
83、ansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment172023 Top Office Markets|AlbuquerqueNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment R
84、ateProjected 2023-2027 office job growthWorkforce participation rate2.9%0.7%66.2%AtlantaGeorgiaMarket Overview In 2022,Atlanta experienced robust job growth of 5.8%,surpassing the U.S.growth rate of 4.1%.Restaurants,technology,and healthcare services primarily drove the employment surge.Looking ahea
85、d,Oxford Economics anticipates a job growth rate of 1.2%in 2023,followed by an average rate of 0.7%from 2024 to 2027,higher than the projected U.S.rate of 0.5%.Leasing bounced back notably in 2022,when net absorption finished the year in positive territory,just over 1.5 million square feet,for the f
86、irst time since 2019.Class A properties accounted for 90%of the overall absorption as new deliveries and a flight-to-quality spurred leasing.Although the overall vacancy rate ticked up 20 basis points during the year to 16.9%,Class A lease rates increased by 2.8%.However,as the year progressed,the p
87、ace of rate increases continued to slow,to a 1%rate decline in the fourth quarter.Over three million square feet of new product was delivered,most of which could be classified as“trophy.”Atlantas urban core received its fair share,with over half of all new space in Fourth Ward,Midtown Union,One Phip
88、ps Plaza,and 14th and Spring.Tenant Opportunities With 4.2 million square feet of product under construction and a 21.6%Class A vacancy rate,tenants seeking to upgrade will have ample space options.Lease rates will feel downward pressure as vacancy rates rise and the supply of sublease space increas
89、es.Landlords will be aggressive with concessions for high-quality tenants.For tenants with term flexibility,quality high-end sublease space,often fully furnished,will be available at deep discounts.Over the next five years,Atlanta is projected to be in the bottom 25%for home price appreciation,makin
90、g the metro area a strong draw for out-of-state businesses seeking to relocate their employees.Tenant Challenges Tenants that signed short-term leases in 2020 will be pressed to finalize space decisions despite the continued lack of clarity in return-to-the-office and hybrid work strategies.More ten
91、ants will likely be compelled to shoulder build-out expenses due to the combination of escalating construction costs and some landlords constrained cash flows.A lack of clarity about the future of hybrid and remote work will continue to challenge tenants analyzing their space needs.18Colliers U.S.Re
92、search ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 Forecast0%2%4%6%8%1
93、0%12%14%16%18%(1,000,000)01,000,0002,000,0003,000,0004,000,0005,000,0006,000,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate16.9%17.5%9.9%Qtr/Year it happenedQ4 2022Q2 2010Q1 2001Class A Lease Rates$33.35$33.37$21.81Qtr/Year it ha
94、ppenedQ4 2022Q3 2022Q1 2005Average Annual Growth and Rank2023Growth&Rank2023-2027 Growth&RankGDP0.3%1.7%2419Employment1.2%0.8%3822Population1.2%1.2%1011Spending1.8%2.3%913House Prices0.2%1.2%2047Absorption,New Supply&VacancyTotal InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail
95、.RateUnder ConstructionAvg Class A Rate237,024,4781,519,614 16.9%21.4%1.0%4,192,938$33.35$37.14$27.21$26.91$22.38 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimis
96、macceptancereliefoptimismexcitementvibrancekey momentkey moment192023 Top Office Markets|AtlantaNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate3.0%2.3%71.2%AustinTexasMarket Overview No city in the country can ma
97、tch Austins office job growth over the last few years.Since the start of the pandemic,Austin has had a 23.7%job growth rate,easily outpacing second-place Jacksonville at 15.2%and the national average of 4.3%.Vacancy continued to rise in 2022,by 120 basis points from Q1 to Q4.Austins overall rate is
98、21.5%,the highest in over 20 years.Suburban Class A vacancies in 2022 were 19.7%,while those of Class A in the CBD reached 20.5%.Net absorption turned negative in the second quarter and remained there in 2022.After nearly 500,000 square feet of positive absorption in the first quarter,the market fin
99、ished the year at negative 488,853.Although leasing continues to creep up,some landlords offered generous concessions in free rent and tenant improvements.CBD Class A full-service rates ended at$68.50 per square foot for direct space and$50.22 for sublease.Clearly,sublease rates can vary depending o
100、n the circumstances of availability.Class A full-service rates in the suburbs for direct space are$55.77 and$44.79 for subleases.Tenant Opportunities Ample sublease space available offers tenants a great opportunity to lease shorter-term,move-in-ready space at deep discounts.While larger blocks of s
101、pace are difficult to find,although not impossible,smaller tenants seeking between 1,000 10,000 square feet have abundant options.As landlords are more motivated,tenants can take advantage of concessions.Tenant Challenges Access to capital seems to be a driving factor in resistance to acquiring spac
102、e,along with the hybrid work environment creating uncertainty.There is an influx of interest in creative office space in south Austin,causing locational challenges for some tenants.Although many seek creative concept spaces without high build-out costs,this product has a limited supply.In line with
103、locational challenges,many tenants want move-in ready space,but non-sublease space options are hard to come by.Many spaces are either in shell condition or old.20Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastY
104、ear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank2023Growth&Rank2023-2027 Growth&RankGDP1.3%2.4%54Employment2.6%1.8%31Population1.8%1.9%21Spending2.4%3.2
105、%31House Prices-0.8%2.6%305Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate68,521,440(671,555)21.5%24.8%6.0%5,612,000$54.22 0%2%4%6%8%10%12%14%16%18%20%(2,000,000)(1,500,000)(1,000,000)(500,000)0500,0001,000,0001,500,0002,000,0002,50
106、0,0003,000,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate12.6%19.5%12.6%Qtr/Year it happenedQ4 2022Q1 2017Q4 2022Class A Lease Rates$22.34$24.61$19.52Qtr/Year it happenedQ4 2022Q3 2020Q2 2018Absorption,New Supply&Vacancy$68.50$55
107、.77$50.22$44.79 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment212023 Top Office Markets|AustinNet
108、 AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate4.2%0.3%66.9%BaltimoreMarylandMarket Overview The overall vacancy rate increased by 30 basis points in 2022 and is 200 basis points higher since the start of the pandem
109、ic.Class A space remained the largest contributor to the rise and ended the year at 16.3%.After over a million square feet was given back in 2021,the market attracted slight positive demand in 2022,and net absorption for the year tallied 232,621 square feet,mostly occurring in the years second half.
110、Rents have remained steady throughout 2022,increasing just$0.07 from the start.While Baltimore is projected to be in the top half of our metro analysis for GDP and employment growth in 2022,which rank No.26 and No.24,respectively,those metrics are projected to fall to the lower half of the pack over
111、 the next five years.Tenant Opportunities Tenants who understand and act on their space needs can get very favorable deals in current market conditions.Class A sublet space in the market is being offered at an average 20%discount in the CBD and 27%in the suburban areas.The market lacks great public
112、transportation,but does have a well-educated workforce that draws from several nearby universities.Tenant Challenges Although there is a nationwide flight to quality,high-end space options are limited.With a rising-interest-rate environment and shrinking cash flows,some owners struggle to borrow for
113、 tenant improvement allowances.Public transportation that is less robust than in nearby metro markets limits companies hiring.22Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023
114、 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank2023Growth&Rank2023-2027 Growth&RankGDP0.2%1.4%2636Employment1.5%0.5%2442Population-0.1%0.2%5048Spending0.5%1.3%4850House Prices-4.4%-0.3%
115、5059Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate123,429,203232,621 12.3%14.1%1.3%918,447$27.53 0%2%4%6%8%10%12%14%(1,500,000)(1,000,000)(500,000)0500,0001,000,0001,500,0002,000,000200212022Net AbsorptionDeliveriesVacan
116、cy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate12.3%13.6%9.8%Qtr/Year it happenedQ4 2022Q3 2010Q2 2018Class A Lease Rates$27.53$27.96$21.66Qtr/Year it happenedQ4 2022Q3 2022Q1 2004Absorption,New Supply&Vacancy$27.09$28.18$21.43$20.52 Imbalanceof supply and demand;Rental value falli
117、ngExpansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment232023 Top Office Markets|BaltimoreNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemploymen
118、t RateProjected 2023-2027 office job growthWorkforce participation rate2.5%0.3%60.8%BirminghamAlabamaMarket Overview Oxford Economics projects that GDP will only increase by 1.1%annually over the next five years,slower than the projected average 1.5%annual growth for the U.S.Total employment growth
119、is also anticipated to be lower than the national average and will only increase by 0.4%annually between 2023 and 2027.The metros office market relies on demand from local and regional firms to drive absorption,and they have been slow to lease large blocks,leaving net absorption just over negative 3
120、0,000 square feet for the year.Leasing is still below average levels for the area as companies continue reassessing space needs after adopting remote and hybrid work models.Vacancy of 11.6%is a record high and well above the 8.8%in Q3 2018.Cap rates for stabilized multitenant office buildings remain
121、 in the low 8%range.Tenant Opportunities Rising vacancies enable a wide selection of spaces and size ranges in Class A and B buildings.Tenant consolidations and over 650,000 square feet of available sublet space have impacted Class A office space the most.Rate-conscious tenants are looking to the CB
122、D,as rents have increased less than suburban submarkets.Tenant Challenges Although rents are cheaper downtown,parking is expensive,if you can find it.Some older office spaces are being demolished in order to build multifamily,multi-use,retail,and entertainment venues,diminishing overall office inven
123、tory.High construction costs are pushing some tenant improvements beyond landlord allowances.24Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYe
124、ar-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank2023Growth&Rank2023-2027 Growth&RankGDP0.0%1.1%3552Employment0.9%0.4%4954Population0.3%0.4%3942Spending0.5%1.5%4944House Prices3.9%3.2%11Total InventoryYTD Net AbsorptionV
125、acancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate57,600,000(30,411)11.6%12.9%0.9%56,500$22.98 0%2%4%6%8%10%12%14%(100,000)0100,000200,000300,000400,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate11.
126、6%11.6%8.8%Qtr/Year it happenedQ4 2022Q4 2022Q3 2018Class A Lease Rates$25.45$25.45$20.04Qtr/Year it happenedQ4 2022Q4 2022Q2 2013Absorption,New Supply&Vacancy$23.00$22.70$21.75$18.10 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth ac
127、celeratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment252023 Top Office Markets|BirminghamNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation
128、rate2.6%1.1%63.2%BoiseIdahoMarket Overview Positive net absorption,low vacancy,and steady asking rates were the norms in 2022.With 187,582 square feet of absorption,new deliveries also pushed the vacancy rate up to 4.7%.At 2.6%,unemployment in the Boise metro is a full 100 basis points below the nat
129、ional average of 3.5%.Micron has committed to a$15 billion investment in a plant in the Boise area over the next decade that is expected to employ 2,000 people directly and bring 17,000 jobs to the area.Idaho has been the fastest-growing state over the last two years,and from 2014 to 2019,Boises pop
130、ulation increased by 2.4%annually,to a total population of 792,000.Its anticipated that Boises population will grow at an average 1.8%per year through 2027.Tenant Opportunities With high business interest in the area,job growth will remain strong over the next five years,higher than the national ave
131、rage.Workforce increases are also expected to continue,driven by the new Micron plant.Despite steady increases,asking rates remain very affordable by national standards.As the supply-demand imbalance levels out,tenants will benefit from rising tenant improvement allowances offered.Tenant Challenges
132、With an unemployment rate at around 2.5%,companies are challenged to find employees.The population growth rate has shown signs of deceleration recently.In certain submarkets such as Meridian,competition for space remains fierce,as rapid growth in the area has attracted increased population and deman
133、d for commercial and residential real estate.26Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-e
134、nd 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank2023Growth&Rank2023-2027 Growth&RankGDP0.4%1.8%2012Employment1.2%1.1%3510Population2.2%1.8%12Spending1.7%2.5%115House Prices-4.0%2.6%466Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUn
135、der ConstructionAvg Class A Rate33,268,498187,582 4.7%6.4%11.2%367,412$22.71 0%1%2%3%4%5%6%0200,000400,000600,000800,0001,000,0001,200,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate4.7%13.2%2.7%Qtr/Year it happenedQ4 2022Q4 2007Q
136、2 2022Class A Lease Rates$22.71$24.18$16.40Qtr/Year it happenedQ4 2022Q3 2020Q1 2007Absorption,New Supply&Vacancy$25.49$23.03$21.56$21.88 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming
137、outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment272023 Top Office Markets|BoiseNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate3.3%0.6%68.2%BostonMassachusettsMarket Overview
138、 Availabilities in the city of Boston reached a record high in Q4 2022.Fundamentals also weakened in Cambridge and the Suburbs,but availabilities in both geographies are well below historic highs.Overall,more than 32 million square feet is available across the metro.More than 24 million square feet
139、of direct space and 7.8 million square feet of sublease space was available in Q4 2022.The most notable availability growth was in Class B buildings within Bostons urban core.Commitments in underway and recently completed office buildings are strong.In Boston,more than four million square feet are u
140、nderway or under major renovation.However,the supply pipeline in Cambridge/Suburbs is relatively empty,as developers have favored life sciences projects.Bostons GDP is projected to reach 1%in 2023,at No.8 in all metros and well above the U.S.average of 0.1%.Tenant Opportunities Boston is a tenants m
141、arket with a wide range of leasing opportunities in Class B product.For companies avoiding long-term leases,a large amount of sublease space is available for potentially shorter terms.Many landlords are providing favorable TI allowances and concessions,making this a good time to relocate and upgrade
142、 space.Tenant Challenges Rising interest rates and a volatile stock market have placed some companies in a holding pattern on decision-making and growth potential.The tight labor market makes it hard to attract workers.Employee expectations for working from home make bringing workers back to the off
143、ice challenging.28Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|
144、Year-end 2023 ForecastAverage Annual Growth and Rank2023Growth&Rank2023-2027 Growth&RankGDP1.0%1.9%811Employment1.3%0.6%3134Population0.9%0.6%2230Spending1.9%2.0%522House Prices-2.7%1.4%4138Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A
145、 Rate186,299,441(2,499,524)-13.0%4.2%3,576,152$50.40 0%2%4%6%8%10%12%14%16%18%20%(8,000,000)(6,000,000)(4,000,000)(2,000,000)02,000,0004,000,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate17.2%21.2%12.9%Qtr/Year it happenedQ4 2022
146、Q2 2003Q2 2019Class A Lease Rates$50.40$50.40$26.99Qtr/Year it happenedQ4 2022Q4 2022Q2 2006Absorption,New Supply&Vacancy$69.73$31.21$52.05$28.70 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bo
147、ttoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment292023 Top Office Markets|BostonNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate2.9%1.4%61.7%CharlestonSouth CarolinaM
148、arket Overview The market has drawn an influx of talent and companies,resulting in healthy leasing as people return to the office and companies grow.Rapid population growth has driven this,especially from college-educated adults of all ages.The region has also attracted substantial capital investmen
149、t in the manufacturing and logistics sectors,driving demand in the professional and business services sectors.Landlords continue to push up rents for new Class A space,while existing spaces are following,raising their rates as much as 15%20%higher than just a few years ago.Build-out costs for Class
150、A office space remain high and are rising,a barrier to entry for shell-condition space.Tenants may soon prioritize existing space needing fewer changes,if landlords give appropriate tenant improvement allowances.While GDP growth is projected to decline 0.2%and trail the national average in 2023,over
151、 the next five years,annual growth is projected at 1.8%,placing it No.17 on the list.Tenant Opportunities The growth of several submarkets means downtown buildings compete with each other and the entire market.Tenants can therefore use better parking and rates off the peninsula(CBD)for more favorabl
152、e terms,especially if theyre prepared to leave office properties in the most heavily touristed portions of the CBD.Flexible work environments allow tenants to design a space for their needs today and in the future.Space flexibility allows for longer lease terms,providing more short-term cost benefit
153、s like lower starting rates and increased tenant improvement allowances.Tenant Challenges Rising build-out costs will continue to be a barrier to entry,especially for shell-condition space.Tenants may soon prioritize existing space needing fewer changes with appropriate tenant improvement allowances
154、.A lack of new developments on the horizon and a continued influx of businesses mean vacancies should keep falling,creating a landlords market.High construction costs will continue to provide challenges for new leases.30Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD S
155、uburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 Forecast0%5%10%15%20%25%(600,000)(400,000)(200,000)0200,000400,000600,000800,0002018
156、20022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate17.8%19.9%7.3%Qtr/Year it happenedQ4 2022 Q2 2022Q3 2016Class A Lease Rates$33.60$34.76$19.53Qtr/Year it happenedQ4 2022Q3 2022Q4 2003Average Annual Growth and Rank2023Growth&Rank2023-2027 G
157、rowth&RankGDP-0.2%1.8%3917Employment2.0%1.0%813Population0.7%0.9%2819Spending1.4%2.1%2018House Prices0.1%0.5%2254Absorption,New Supply&VacancyTotal InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate12,473,925580,751 17.8%2.8%553,000$37.30$37
158、.30$31.00 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment312023 Top Office Markets|CharlestonNet A
159、bsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate3.5%1.5%65.7%CharlotteNorth CarolinaMarket Overview Charlottes robust growth in 2022 was similar to that in many other regions in the Southern U.S.Its job growth rate of
160、4.7%surpassed the national average of 4.1%last year,led by the restaurant,employment services,and finance and insurance sectors.Oxford Economics projects that Charlotte will maintain job growth of 2.4%in 2023 and an average rate of 1.0%from 2024 to 2027,higher than the expected national rate of 0.5%
161、.Furthermore,Charlottes net job change from Q1 2020 to Q4 2022 was 5.6%,significantly higher than the U.S.net growth rate of 1.1%.The Charlotte CBD continues to suffer the effects of work from home(WFH),with vacancy up 46 basis points from Q3 2022 to Q4 2022.However,despite the rise in vacancy and s
162、ublease space,Class A landlords are still holding strong on asking rates,right around$37 per square foot per year.Net absorption took a huge hit in Charlotte,-527,921 square feet.As leases continue to expire,more and more tenants have also adopted a“wait and see”mindset by letting their leases roll
163、and having employees work from home until they can decide how to balance remote and office work.The Southend Submarket continues to be a bright spot in an otherwise gloomy Charlotte office market.Strike rates in new developments are approaching$50 per square foot as tenants try to entice employees b
164、ack to work in higher-quality space.Tenant Opportunities Charlotte has over two million square feet of sublease space,a short-term solution for tenants undecided about office use.Leasing concessions are at an all-time high for office tenants.Those with more than 10,000 square feet are getting$10$12
165、per square foot per lease year in tenant improvement allowances and roughly a month of free rent per lease year.Landlords are building more spec suites,providing tenants with move-in-ready options that they can leverage when renewing leases because they can quickly pivot to a spec suite.Tenant Chall
166、enges Pricing for construction materials is still driving higher tenant improvement costs,making it harder for landlords to justify lower rents.Build-out time for office space has been extended due to a longer permitting process and material shortages.Hesitancy to sign longer-term leases limits the
167、number of concessions offered to office tenants.32Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYea
168、r-end 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank2023Growth&Rank2023-2027 Growth&RankGDP0.2%1.8%2718Employment2.4%1.3%43Population1.4%1.4%65Spending1.9%2.5%66House Prices3.2%2.2%215Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnd
169、er ConstructionAvg Class A Rate101,401,945428,200 14.2%18.0%2.5%3,515,694$36.30 0%2%4%6%8%10%12%14%16%(1,000,000)01,000,0002,000,0003,000,0004,000,0005,000,0006,000,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate14.2%15.0%7.6%Qtr/
170、Year it happenedQ4 2022Q2 2010Q3 2016Class A Lease Rates$36.30$36.30$19.30Qtr/Year it happenedQ4 2022Q4 2022Q1 2005Absorption,New Supply&Vacancy$38.10$33.43$37.93$24.76 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingConso
171、lidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment332023 Top Office Markets|CharlotteNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate4.5%0.0%65.3
172、%ChicagoIllinoisMarket Overview In 2022,Chicagos net out-migration of 45,200 residents resulted in a 0.5%decrease in its population.Oxford Economics projects that through 2027,a net out-migration of 215,100 people will cause a population decline of 0.2%annually,while U.S.average population growth is
173、 predicted to be 0.4%annually.The office vacancy rate stands at 19.9%,the highest level in Chicagos recorded history,as several prominent companies have relocated headquarters out of Chicago.Unfortunately,the record wont stand for long,as vacancy is anticipated to increase further in 2023.After nine
174、 consecutive quarters of negative net absorption,Chicago office tenants have vacated and consolidated space,adding over 14 million square feet of vacant office space to the CBD in three years.Overall weighted average direct gross asking rents stayed steady increasing only marginally to$32.16 from$32
175、.09 quarter-over-quarter.Landlords are keen to provide significant concession packages and allow TI allowances to be converted into more free rent.As a result,“effective rents”are lower than statistics suggest.To stay competitive,in some instances landlords are being creative with tenants financing.
176、Tenant Opportunities With CBD sublease availability at 4.3%,the highest on record for downtown Chicago,there is a flood of space options for tenants seeking shorter leases with fully built-out space.Lease rates in all asset classes will remain very competitive and enticing,as landlords of quality as
177、sets are highly motivated to be creative and accommodating in pricing.Tenants able to sign short-term leases can gain better flexibility for the future.Tenant Challenges The high cost of construction may still deter any new tenant who wants to build out existing space.With workers reluctant to retur
178、n to the office full-time,hybrid options mean that the downtown area is less populated,causing a slight increase in safety issues and reducing dining and retail options.Under the added pressure of the current economy,tenants still struggle to forecast space needs.34Colliers U.S.Research ReportOffice
179、 Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank
180、2023Growth&Rank2023-2027 Growth&RankGDP-0.6%1.2%5449Employment0.6%0.2%5857Population-0.2%-0.2%5558Spending0.2%1.1%5557House Prices-0.2%1.4%2540Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate320,472,905(3,302,002)19.9%27.6%4.3%2,019,
181、382$39.85 0%5%10%15%20%25%(8,000,000)(6,000,000)(4,000,000)(2,000,000)02,000,0004,000,0006,000,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate19.9%19.9%12.9%Qtr/Year it happenedQ4 2022Q4 2022Q2 2008Class A Lease Rates$39.85$39.85$
182、28.75Qtr/Year it happenedQ4 2022Q3 2022Q4 2005Absorption,New Supply&Vacancy$48.84$30.85$27.54$22.60 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancerel
183、iefoptimismexcitementvibrancekey momentkey moment352023 Top Office Markets|ChicagoNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate3.4%0.5%64.4%CincinnatiOhioMarket Overview Cincinnati has faced economic difficulti
184、es competing with other Midwest cities due to a reliance on manufacturing and a comparatively lower level of economic diversity.In 2022,the citys job growth of 1.3%was significantly below the national rate of 4.1%.As of year-end,employment in Cincinnati remained 1.6%below its Q1 2020 level,and a ful
185、l recovery is not anticipated until Q3 2025.Large portions of space are being converted into residential buildings,notably including the historic Carew Tower and the former Macys HQ.Those two together equal nearly one million square feet of space being converted within the CBD.Net absorption finishe
186、d at-441,619 square feet in 2022,less than 2021s annual net absorption of-557,913 square feet.Annual net absorption finished higher than originally predicted,indicating a slowdown in the effects of COVID-19 on the office market.Vacancy gradually increased throughout 2022 to finish the year at 16.8%.
187、Rents also grew to an average market rate of$19.34,a$0.50 increase from Q1 2022.Tenant Opportunities Vacancy rates steadily increased throughout 2022,providing tenants more space options and bargaining power.With a low sublease availability rate of 1.6%,60 basis points lower year-over-year,tenants s
188、eeking to sublet space face little competition.Office-using sectors had a year-over-year increase of 300 employees.Tenant Challenges Office asking rates have been steadily increasing each year since 2018.Class A asking rents,$22.46 per square foot in 2018,are now$23.56 per square foot.Submarkets mos
189、t favored by Class A tenants continue to have low office vacancy rates.For example,I-75 Norths Class A vacancy rate was 14.3%at the end of 2021 but finished at 10%in 2022.Oxford Economics projects minimal migration over the next five years and an average annual population growth of 0.2%through 2027,
190、below the predicted national rate of 0.4%.36Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end
191、2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank2023Growth&Rank2023-2027 Growth&RankGDP-0.5%1.3%5344Employment1.3%0.5%3044Population0.2%0.2%4445Spending0.8%1.4%3945House Prices1.8%1.8%1125Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateU
192、nder ConstructionAvg Class A Rate59,998,707(441,619)16.8%18.4%1.6%103,000$23.56 0%2%4%6%8%10%12%14%16%18%(800,000)(600,000)(400,000)(200,000)0200,000400,000600,000800,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate16.8%21.7%14.0%Q
193、tr/Year it happenedQ4 2022Q4 2010Q1 2020Class A Lease Rates$23.56$23.56$20.80Qtr/Year it happenedQ4 2022Q4 2022Q4 2013Absorption,New Supply&Vacancy$23.75$23.47$23.18$25.01 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingCo
194、nsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment372023 Top Office Markets|CincinnatiNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate5.1%0.2%
195、61.2%ClevelandOhioMarket Overview Clevelands annual job growth rate of 3.1%trailed the U.S.average by one percentage point in 2022.The Cleveland markets vacancy has surged since the pandemics onset.At year-end 2019,vacancy was 12.6%and has since increased 230 basis points to 14.9%at year-end 2022.Th
196、e market has struggled to return to pre-pandemic activity,especially in the CBD.Net absorption was positive in the first half of the year but turned negative in the last two quarters,due to economic headwinds and rising sublease availability from employers that adopted remote and hybrid work models.
197、Employers are paying a premium for space with updated technologies and modern amenities,adding value to the office experience as the flight-to-quality trend continues.Newer,highly amenitized buildings are attracting healthy leasing compared to older,dated office buildings.Tenant Opportunities After
198、multiple local leadership changes,downtown Cleveland is rebuilding a strong core,and tenants have abundant inventory to choose from.With the rise in sublease space,some tenants will be able to sublease new Class A space at a slight discount.More sublease space is expected to hit the market in 2023.U
199、nlike the industrial sector,where landlords are in control,the pendulum firmly favors the tenant in the office sector,as landlords offer generous concessions.Tenant Challenges Most tenants with more than 20,000 square feet of space continue to delay decisions and hesitate to commit to a five-or ten-
200、year term.Employees remain in firm control of their employers,and many favor remote work.Employment is still 1.2%below the pre-pandemic level,and Oxford Economics projects that Clevelands job count will grow by 1%before stagnating over the following few years.38Colliers U.S.Research ReportOffice Met
201、rics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank2023
202、Growth&Rank2023-2027 Growth&RankGDP-0.7%1.0%5753Employment1.0%0.2%4758Population-0.3%-0.2%5859Spending0.2%0.9%5358House Prices2.0%2.1%817Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate52,206,384(44,193)14.9%17.7%1.5%2,750,669$21.87
203、0%2%4%6%8%10%12%14%16%(300,000)(200,000)(100,000)0100,000200,000300,000400,000500,000600,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate14.9%15.5%7.7%Qtr/Year it happenedQ4 2022Q1 2004Q4 2018Class A Lease Rates$21.87$22.19$18.98Qt
204、r/Year it happenedQ4 2022Q1 2022Q1 2007Absorption,New Supply&Vacancy$21.31$19.97$12.84$14.15 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefopti
205、mismexcitementvibrancekey momentkey moment392023 Top Office Markets|ClevelandNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate3.1%0.4%59.7%ColumbiaSouth CarolinaMarket Overview Economic growth in the region is fast
206、er than average for the U.S.economy and appears to be accelerating as a multiyear strategy to attract manufacturing pays dividends.The Southeast and South Carolina,in particular,have drawn several manufacturing investments related to converting from combustion to electric powered trains.The vacancy
207、rate increased by 30 basis points during 2022,to 14.3%.While elevated from the record low of 9%in Q1 2020,todays rate remains well below the 25%high-water mark in 2012.Because of a strong flight-to-quality for Class A space in the suburban and CBD market,Class A space is now in short supply.There is
208、 limited leasing in the Class B sector and virtually none in the Class C inventory.Many large spaces are available directly and as sublets.However,most are in Class B and C buildings,requiring substantial capital investment to make the space attractive.Moreover,much of the sublet space is not easily
209、 divisible,meaning only the largest tenants would have an interest.Tenant Opportunities Smaller tenants have ample space options,even within Class A properties.Very large tenants have several quality sublet spaces available,if their footprints align with available spaces as currently configured.Tota
210、l employment growth is expected to outperform the national average over the next five years.Tenant Challenges High-quality Class A space options for tenants requiring 10,000 square feet or larger remain in short supply.The cost to upfit space is the largest challenge facing tenants.Available vacant
211、spaces are second-and third-generation,requiring substantial investment to modernize.Few choices exist for a tenant wanting a Class A building.40Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 Fore
212、castYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 Forecast0%2%4%6%8%10%12%14%16%(600,000)(500,000)(400,000)(300,000)(200,000)(100,000)0100,000200,000200212022Net AbsorptionDeliveriesVacancy RateHist
213、orical Metrics|Last 20 yearsCurrentHighLowVacancy Rate14.3%25.0%9.0%Qtr/Year it happenedQ4 2022Q1 2012Q1 2020Class A Lease Rates$22.45$22.45$17.55Qtr/Year it happenedQ4 2022Q4 2022Q3 2002Average Annual Growth and Rank2023Growth&Rank2023-2027 Growth&RankGDP0.1%1.4%3139Employment1.6%0.7%1828Population
214、-0.1%0.3%5144Spending0.8%1.7%3838House Prices3.2%1.4%436Absorption,New Supply&VacancyTotal InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate15,315,930(65,900)14.3%3.0%0$22.45$23.79$21.48 Imbalanceof supply and demand;Rental value fallingExp
215、ansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment412023 Top Office Markets|ColumbiaNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment Rate
216、Projected 2023-2027 office job growthWorkforce participation rate3.3%0.5%66.7%ColumbusOhioMarket Overview The Columbus metro area had one of the smallest vacancy rate increases in 2022,just 30 basis points,to 13%,but since vacancies set a record low in Q4 2019,they have risen 420 basis points.While
217、net absorption remained negative at 228,726 square feet,its trending in the right direction after posting-927,569 square feet and-717,942 square feet in 2020 and 2021,respectively.Intel announced that it would invest more than$20 billion for two new semiconductor chip facilities in New Albany,creati
218、ng 3,000 direct jobs and 7,000 construction jobs over the build.It also will support tens of thousands of additional long-term jobs across an ecosystem of suppliers and partners.To put the investment into context,the$20 billion cost is more than the total valuation of Licking County,according to Ric
219、k Platt,CEO of the Heath-Newark-Licking County Port Authority.Tenant Opportunities The supply of sublease space ballooned in the fourth quarter,rising 55%,offering an ample supply of discounted space.While Class A lease rates have risen locally and nationally,Class B and C rents are declining,benefi
220、ting rate-conscious tenants.Flight-to-quality trends continue as spaces within highly amenitized,high-demand areas attract tremendous interest.On the other hand,spaces difficult to lease pre-pandemic continue to see headwinds.Tenant Challenges Heavy dependence upon downtown office locations poses ch
221、allenges to office workers return.The area will continue to see a talent exodus due to its high cost of living and the popularity of remote work.With a decline in projects underway and announced projects,tenants seeking new highly amenitized space will have limited options.42Colliers U.S.Research Re
222、portOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growt
223、h and Rank 2023 Growth&Rank2023-2027 Growth&RankGDP-0.2%1.5%3733Employment1.2%0.7%4031Population0.8%0.9%2520Spending1.1%1.9%3024House Prices1.5%1.8%1526Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate67,101,416(228,726)13.1%18.3%1.5%
224、787,625$24.09 0%2%4%6%8%10%12%14%(1,500,000)(1,000,000)(500,000)0500,0001,000,0001,500,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate13.1%13.1%8.8%Qtr/Year it happenedQ4 2022Q4 2022Q4 2019Class A Lease Rates$24.09$24.09$20.81Qtr/
225、Year it happenedQ4 2022Q4 2022Q4 2019Absorption,New Supply&Vacancy$21.46$17.79$25.62$20.73 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimi
226、smexcitementvibrancekey momentkey moment432023 Top Office Markets|ColumbusNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate3.7%1.2%69.3%Dallas-Fort WorthTexasMarket Overview Office jobs in the greater Dallas-Ft.Wor
227、th area have grown at a blistering pace,rising 14.5%since the start of the pandemic and trailing only growth in Austin,Jacksonville,and Raleigh during that time.Despite finishing the year on a down note of negative net absorption of 840,778 square feet in the fourth quarter,the market absorbed just
228、over 1.8 million square feet for the year,indicating it is still very stable and resilient.The vacancy rate ended the year at 19.7%,rising 30 basis points during the quarter and pushing rates into historically high territory.Sublease space continued to increase,ending the year at over 10 million squ
229、are feet,an increase of close to 100%since 2020.Class A lease rates reached a new high in Q4 2022 at$34.62 per square foot for full service and helped pull the overall asking rents to a new record of$30.44 per square foot.Tenant Opportunities Spec suites remain popular,and many landlords are offerin
230、g turnkey spaces for appropriately sized tenants that provide enough scale.Tenants can meet five-year terms without paying for their own improvements.Over the last five years,over 23 million square feet of new space has been added,and with 6.4 million square feet more underway,tenants seeking newer
231、product have options.As the most well-capitalized companies upgrade to trophy space to encourage workers to return to the office,that leaves a window for the next tier to backfill that vacated space with favorable terms.Tenant Challenges Strong landlord confidence in the metro area has spurred signi
232、ficant capital improvements in many buildings.The resulting asking rates in these updated buildings are causing sticker shock.Although the availability rate has reached 23.5%,rental rates continue to rise for now.Companies reducing space have to plan for times when more of the workforce is on site,w
233、hich puts a strain on parking and seating.44Colliers U.S.Research ReportOffice Metrics|Q4 2022CBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle
234、|Year-end 2023 ForecastAverage Class A FSG Rates(Dallas area only)Average Annual Growth and Rank 2023 Growth&Rank2023-2027 Growth&RankGDP0.7%2.0%137Employment1.4%1.0%2712Population1.3%1.3%86Spending1.4%2.4%2110House Prices-0.3%1.5%2634Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSub
235、lease Avail.RateUnder ConstructionAvg Class A Rate313,394,5161,820,586 19.7%23.5%3.3%6,409,103$34.62 0%5%10%15%20%25%(4,000,000)(2,000,000)02,000,0004,000,0006,000,0008,000,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate19.7%19.8%
236、15.0%Qtr/Year it happenedQ4 2022Q4 2022Q2 2015Class A Lease Rates$34.62$34.62$19.99Qtr/Year it happenedQ4 2022Q4 2022Q2 2004Absorption,New Supply&Vacancy$31.40$31.08$28.52$25.94 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth accelera
237、tingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment452023 Top Office Markets|Dallas-Fort WorthNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation
238、 rate3.8%0.0%60.0%DaytonOhioMarket Overview Office space around the Wright-Patterson Air Force Base is expected to attract increased leasing throughout 2023.However,the rest of Dayton faces many of the same challenges as other office markets.Annual net absorption for 2022 finished at-308,998 square
239、feet,a significant drop from 2021s-1,237 square feet.The CBD had the highest overall vacancy rate at 30.9%.Overall average asking rents ended the year at$16.83 per square foot,a$0.18 drop from$17.01 per square foot in Q4 2021.Over the next five years,Oxford Economics anticipates a 1%annual increase
240、in GDP,lower than the projected 1.5%annual growth rate for the U.S.during the same period.Total employment growth is also expected to be below the national average.Tenant Opportunities Lease rates are beginning to fall,albeit more slowly than tenants are expecting.At$18.46 per square foot,Class A CB
241、D lease rates remain substantially discounted over suburban Class A properties,at$25.50 per square foot.As in other markets,companies in Dayton have been able to downsize space since the pandemic,leading to increased vacancy and more bargaining power for the tenant.While the office market is experie
242、ncing a flight-to-quality,plenty of Class A space remains,with direct vacancy at 23.8%.Tenant Challenges Banks have become more risk-averse,making it more difficult for tenants to secure financing for larger deals.The cost of new construction is rising,and only 83,000 square feet are under construct
243、ion,of which 23,000 square feet is build-to-suit.Unlike other markets,Dayton does not have abundant sublease space,with availability at 0.5%at year-end.46Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end
244、2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 Forecast0%5%10%15%20%25%(400,000)(300,000)(200,000)(100,000)0100,000200,000300,000400,000500,000600,000700,000200212022Net AbsorptionDelive
245、riesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate22.2%24.7%18.7%Qtr/Year it happenedQ4 2022Q1 2014Q3 2020Class A Lease Rates$20.24$20.43$18.23Qtr/Year it happenedQ4 2022Q4 2014Q3 2016Average Annual Growth and Rank 2023 Growth&Rank2023-2027 Growth&RankGDP-0.6%1.0%5556Employme
246、nt0.8%0.1%5559Population-0.3%-0.2%5757Spending0.0%0.8%5859House Prices1.0%1.5%1635Absorption,New Supply&VacancyTotal InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate14,884,575(308,998)22.2%22.0%0.5%83,000$20.24$18.46$25.50$21.75 Imbalanceo
247、f supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment472023 Top Office Markets|DaytonNet AbsorptionDeliveriesVacan
248、cy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate3.7%0.9%71.8%DenverColoradoMarket Overview The Denver metros office vacancy stood at 15.9%at year-end,and the Downtown market rate was the highest at 21.7%,40 basis points less than the previous
249、 quarter.Net absorption returned to a positive figure in the Denver metro,recording 21,056 square feet;after a challenging Q3 2022,which realized-830,000 square feet,YTD absorption numbers are still positive.For a struggling office market,there still is much promise for 2023 and beyond.Average direc
250、t full-service lease rates in Denver decreased slightly in Q4 2022,to$30.58 per square foot from$30.60 per square foot in Q3.Class A rates in the Southeast realized a$0.25 per square foot increase,to$29.82 per square foot,while Downtown had a small decrease from$38.90 per square foot to$38.37.Oxford
251、 Economics forecasts Denver will have job growth of 1.2%in 2023 and an average job growth rate of 0.9%in 2024 through 2027,above the forecasted U.S.rate of 0.5%.Tenant Opportunities Sublease space available rose 300,000 square feet during Q4 2022,pushing the overall square footage to 4.1 million.Of
252、that,1.5 million square feet is downtown,and Class A space is offered at an average 37%discount over direct space.With a growing development pipeline that ended the year at 4.1 million square feet,tenants have ample high-quality space options.High vacancy rates are causing landlords to offer attract
253、ive concessions and a large array of options and flexibility for tenants.Tenant Challenges The return of office workers has proven to be increasingly difficult because of hybrid models adapted during the pandemic.As the cost of living increases,many well-educated employees will be forced to move to
254、suburban areas.Despite efforts to bring back employees working from home,many large employers still find this challenging,leading to increased flexibility in work arrangements.48Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-en
255、d 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank 2023 Growth&Rank2023-2027 Growth&RankGDP0.7%1.9%159Employment1.2%0.9%3616Population1.1%
256、1.0%1415Spending1.6%2.3%1312House Prices-2.9%1.2%4345Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate171,217,134(269,763)15.9%14.9%2.3%4,082,315$29.98 0%2%4%6%8%10%12%14%16%18%(4,000,000)(3,000,000)(2,000,000)(1,000,000)01,000,0002,0
257、00,0003,000,0004,000,0005,000,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate15.9%16.7%10.1%Qtr/Year it happenedQ4 2022Q3 2003Q2 2016Class A Lease Rates$29.98$34.18$18.33Qtr/Year it happenedQ4 2022Q2 2022Q1 2004Absorption,New Supp
258、ly&Vacancy$39.12$30.93$24.29$21.26 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment492023 Top Offic
259、e Markets|DenverNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate4.5%0.2%61.1%DetroitMichiganMarket Overview Job growth in Detroit was robust in 2022,at a rate of 4.3%,surpassing the U.S.growth rate of 4.1%.While t
260、otal employment remains 0.3%lower than pre-pandemic levels,a full recovery is anticipated in Q1 of 2023.But Oxford Economics projects that job growth will average 0.3%through 2027,half the rate projected for the U.S.during the same period.Metro Detroits vacancy rate increased by 50 basis points year
261、-over-year to 12.9%but remained well below the 18.1%high set in 2010.Net absorption turned positive during the first three quarters of the year but ended the year in the red overall,at-1,269,565 square feet.The fourth quarter negative net absorption of 1.3 million square feet was the highest single-
262、quarter net loss since Q1 2010.Landlords held asking rates firm but continued to offer generous concessions in the form of free rent and improvement allowances.The overall full-service rate ended at$21.12 per square foot.Tenant Opportunities Sublease availability is at a 10-year high,a benefit for t
263、enants looking to sign short-term leases.Tenants are receiving higher than normal market concessions for signing long-term direct leases.Companies are downsizing existing footprints,allowing moves to more expensive properties while keeping overall rent costs similar.Tenant Challenges Tenants who can
264、not receive increased tenant improvement allowances may be unable to update current space due to the high cost of construction and/or improvements.Employers risk losing workers to other companies if they perceive a lack of top-notch amenities and a welcoming atmosphere.The market could have a talent
265、 exodus due to full-time remote work opportunities.50Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 Forecast
266、Year-end 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank 2023 Growth&Rank2023-2027 Growth&RankGDP-0.4%1.0%4854Employment1.6%0.3%2155Population0.0%0.0%4951Spending1.0%1.3%3149House Prices-0.1%2.4%249Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease
267、Avail.RateUnder ConstructionAvg Class A Rate193,024,258(1,269,565)12.9%17.2%1.4%1,401,536$22.44 0%2%4%6%8%10%12%14%16%18%(1,000,000)01,000,0002,000,0003,000,0004,000,0005,000,0006,000,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rat
268、e12.9%18.1%9.6%Qtr/Year it happenedQ4 2022Q3 2010Q1 2020Class A Lease Rates$22.44$24.56$20.42Qtr/Year it happenedQ4 2022Q4 2002Q3 2013Absorption,New Supply&Vacancy$28.79$22.39$18.61$18.81 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growt
269、h acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment512023 Top Office Markets|DetroitNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation
270、 rate3.1%0.4%67.2%Fort LauderdaleFloridaMarket Overview Rents climbed to an all-time high of$37.22 per square foot full-service,up 5.2%year-over-year,and$41.64 per square foot full-service for Class A,up 3.9%year-over-year.Net absorption trended positive in 2022,the first time since pre-pandemic,rea
271、ching 469,655 square feet.This was driven primarily by new-to-market tenants and the flight-to-quality,particularly at The Main,a new trophy Class A building in Downtown Fort Lauderdale.Uncertainty in the financial markets combined with high investment volume earlier in the year led to stalled trade
272、s in the second half of 2022.However,as the financial markets unlock and capital is ready to be invested,Broward County will be an ideal market,with favorable fundamentals.After years of hovering towards the top quartile for economic prosperity of metro areas featured in this report,Oxford Economics
273、 projects in 2023 and over the next several years,Fort Lauderdale will land around the mid-quartile.Tenant Opportunities Limited large tenants in the market compared to 2022 and 2021 will create more leverage for tenants of all sizes.Interest-rate-environment/debt challenges are applying pressure on
274、 some landlords,causing them to more aggressively pursue good credit tenants in particular.Potential exists for more abatement concessions,as some landlords need to preserve cash in the debt-constrained market.Tenant Challenges Limited supply and,therefore,choices are causing some tenants to take sp
275、ace that is not necessarily“ideal”for their intended use.Some landlords financing pressures limit their ability to provide necessary tenant improvement allowances due to debt constraints.Lack of certainty about the future of remote/hybrid/full workforce models,despite efforts to bring people back to
276、 the office,creates challenges for tenants in identifying the amount of space needed.52Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2
277、023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank 2023 Growth&Rank2023-2027 Growth&RankGDP-0.2%1.6%3826Employment0.6%0.6%5635Population0.5%0.6%3334Spending0.6%1.6%4641House Prices-2.0%2.0%3721Total InventoryYTD Net AbsorptionVac
278、ancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate64,948,966469,655 11.7%14.4%1.8%245,559$41.64 0%2%4%6%8%10%12%14%(1,000,000)(500,000)0500,0001,000,0001,500,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy
279、Rate11.7%14.4%6.9%Qtr/Year it happenedQ4 2022Q4 2011Q3 2006Class A Lease Rates$41.64$41.64$23.75Qtr/Year it happenedQ4 2022Q4 2022Q4 2002Absorption,New Supply&Vacancy$47.10$37.92$33.70$32.39 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value gr
280、owth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment532023 Top Office Markets|Fort LauderdaleNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce pa
281、rticipation rate3.4%0.7%66.7%Grand RapidsMichiganMarket Overview The population of Grand Rapids is expected to continue to increase through 2027,and Oxford Economics expects employment growth at an annual rate of 0.8%over the next five years.Annual GDP growth is projected at 1.5%through 2027,alignin
282、g with the U.S.average growth rate during the same period.While the vacancy rate for the market overall increased ten basis points and ended the year at 7.3%,the downtown area showed marked improvement,with vacancy declining from 10.7%to 8.7%.The suburban market softened,however,increasing from 6.4%
283、to 7.1%in the fourth quarter.Landlords have held asking rates firm.Downtown lease rates increased by$0.07 to$20.89 per square foot per year in the fourth quarter,and suburban rates rose by$0.03 to$15.35.Investment remained strong for quality leased office properties.For example,in the CBD,the Flat I
284、ron sold at the end of 2022 for nearly$10 million,or$322 per square foot.Tenant Opportunities Large sublease blocks and property auctions are becoming more common around the airport.Tenants seeking new construction will find continued development in southwest Grand Rapids.The amenity-rich downtown a
285、rea is an attractive option for tenants looking to relocate to bring employees back to the office Tenant Challenges Rent increases due to inflationary pressures on operating costs will continue throughout 2023.Limited opportunities exist for tenants in search of discounted sublease space.Despite ris
286、ing interest rates,owner-occupied acquisitions are rising,shrinking the inventory of leasable properties.54Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 202
287、3 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 Forecast0%2%4%6%8%10%12%14%(200,000)(150,000)(100,000)(50,000)050,000100,000150,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate
288、7.4%13.0%4.4%Qtr/Year it happenedQ4 2022Q1 2011Q4 2018Class A Lease Rates$17.02$17.02$10.98Qtr/Year it happenedQ4 2022Q4 2022Q1 2014Average Annual Growth and Rank 2023 Growth&Rank2023-2027 Growth&RankGDP-0.3%1.5%4334Employment1.7%0.8%1621Population0.5%0.6%3229Spending1.5%2.0%1423House Prices1.9%2.8%
289、103Absorption,New Supply&VacancyTotal InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate41,792,24195,626 7.4%7.1%0.4%23,812$17.02$22.25$16.28$20.65$15.33 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingR
290、ecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment552023 Top Office Markets|Grand RapidsNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job
291、 growthWorkforce participation rate2.9%0.5%58.3%Greenville-SpartanburgSouth CarolinaMarket Overview The regions economy is growing rapidly,driven largely by an expansion of manufacturing.While this is spread across many industries,automotive manufacturing is attracting massive investment for convers
292、ions to electric power trains.BMW,the regions largest employer,announced a new battery plant in the market,and multiple tier-one suppliers have followed,powering the expansion of the professional and business services sector that uses office space.Class A vacancy in CBD is at an all-time low of 3.5%
293、due to the flight-to-quality and lack of new construction.Asking rents for Class A space in the downtown areas are approaching$27 a square foot.Investment in the office sector slowed substantially in the later half of 2022 due to the interest-rate environment.However,the lack of quality office space
294、 should drive investors prepared to upgrade properties in 2023.Tenant Opportunities Due to the flight-to-quality in the market,there is a lot of opportunity in the Class B or B-buildings whose tenants left for Class A space.A tenant could exploit some chronic vacancies in these buildings with enough
295、 scale.New construction is occurring in Spartanburg,which has invested heavily in its downtown.Tenants with workforces distributed towards the eastern side of the market could take advantage of the relatively less expensive office inventory.Tenant Challenges There is very little move-in ready space
296、available,and almost all space is second-generation.Rents have continued to rise;therefore,rent is almost guaranteed to increase if tenants relocate.With Class A vacancy at all-time lows,tenants are left with very few options and are struggling to get leverage in negotiations with current landlords
297、during renewal.As a result,theres a higher-than-normal number of renewals because of the lack of potential options.56Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYe
298、ar-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 Forecast0%2%4%6%8%10%12%14%16%18%(800,000)(600,000)(400,000)(200,000)0200,000400,000600,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentH
299、ighLowVacancy Rate2543.0%1592.0%0.0%Qtr/Year it happenedQ3 2022Q1 2011Q4 2022Class A Lease Rates$0.00$0.00$0.00Qtr/Year it happenedQ4 2022Q3 2020Q2 2018Average Annual Growth and Rank 2023 Growth&Rank2023-2027 Growth&RankGDP-0.2%1.6%4032Employment1.0%0.6%4639Population0.4%0.6%3833Spending0.9%1.9%3426
300、House Prices3.2%2.0%320Absorption,New Supply&VacancyTotal InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate15,056,613110,000 15.0%2.1%80,000$24.30$26.95$24.05 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth sl
301、owingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment572023 Top Office Markets|Greenville-SpartanburgNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023
302、-2027 office job growthWorkforce participation rate4.1%0.1%65.9%HartfordConnecticutMarket Overview Premier suburban properties will continue to benefit at the expense of CBD properties as tenants seek better amenities and lifestyle options.With the CBD of Hartford dominated by large employers and th
303、e smaller firms that cater to them,we predict an increase in vacancy,as these types of tenants continue to embrace the work-from-home trend for employees.Asking rates have remained consistent,though concessions are better than in years past(mostly free rent).The challenge for landlords is that the s
304、harp increase in tenant improvement costs is proving difficult to finance into a lease where tenants prefer shorter lease terms.Over the five years to 2019,the population of the Hartford metro area was relatively unchanged at 1.2 million people.However,through 2027,Oxford Economics expects the popul
305、ation to fall by an average of 0.2%per year.Tenant Opportunities Tenants have many space options to choose from,and in the case of subleases,often the availability of plug-and-play spaces willing to lease for shorter terms.With an ample inventory and an average Class A lease rate of$19.64,compared t
306、o$20.41 in the suburbs,downtown Hartford remains enticing for tenants.The political environment is friendly to business,and federal COVID-19 relief money is still available to be used to leverage growth and investment.Tenant Challenges With the sharp increase in costs for materials and labor,financi
307、ng tenant improvements has become challenging,causing tenants to accept longer lease terms than they may prefer.Current and prospective employees desire to work from home challenges tenants who want current and new hires to work collaboratively at company offices.Employers shifting to a hybrid model
308、 find managing that workforce harder than anticipated.58Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 Forec
309、astYear-end 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank 2023 Growth&Rank2023-2027 Growth&RankGDP-1.2%0.9%5958Employment1.2%0.2%4156Population-0.4%-0.2%5956Spending0.6%1.3%4451House Prices-1.9%0.6%3552Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSub
310、lease Avail.RateUnder ConstructionAvg Class A Rate47,260,591(567,407)12.7%11.5%1.0%0$22.07 0%2%4%6%8%10%12%14%(800,000)(600,000)(400,000)(200,000)0200,000400,000600,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate12.7%17.2%10.6%Qtr
311、/Year it happenedQ4 2022Q2 2017Q4 2007Class A Lease Rates$22.07$23.66$21.50Qtr/Year it happenedQ4 2022Q3 2019Q1 2006Absorption,New Supply&Vacancy$19.64$20.41$17.37$20.39 Imbalanceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingCons
312、olidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment592023 Top Office Markets|HartfordNet AbsorptionDeliveriesVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate4.8%1.0%62.9
313、%HoustonTexasMarket Overview Vacancy rates grew to their highest level during the fourth quarter,jumping 100 basis points year-over-year,to 23.2%.Class A space outperformed as the flight-to-quality trend persisted,leaving overall vacancy 70 basis points lower,to 23.8%year-over-year.Net absorption re
314、turned to a positive 98,820 square feet during the fourth quarter,finishing the year at 284,877 square feet.The Woodlands submarket boasted the metros largest gains,578,610 square feet,followed by Katy Freeway,424,987 square feet,and the Northwest,208,417 square feet.Landlords held asking rates firm
315、 but with generous concessions of free rent and improvement allowances.The Class A full-service rate ended at$35.46 per square foot.At$45.05 per square foot,Downtown Class A rates were 31%higher than suburban rates.Like Austin and Dallas,Houston had substantial growth after a rebound in the energy s
316、ector and an influx of people moving to the city.The citys job growth in 2022 was notably impressive,at 5.9%,surpassing the U.S.average of 4.1%.According to Oxford Economics,Houston job growth is expected to be 1.7%in 2023 and will average an annual 1%through 2027.Tenant Opportunities At 3.5%,sublea
317、se availability has steadily climbed in the last five quarters,with larger tenants reducing space.There is now a limited selection of large contiguous blocks of space in Class A buildings in several submarkets,including Westchase.Tenants ability to sign short-term leases will allow them more future
318、flexibility.Tenant Challenges Commute times to jobs are a factor for office workers whove spent more time working from home than in the office.The flight-to-quality trend continues,as new leases and renewals are happening the most in Class A buildings,with many tenants opting for smaller spaces.New
319、developments and approved projects now find limited capital,potentially impacting ESG initiatives.Few environmentally progressive buildings are being delivered.60Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastY
320、ear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank 2023 Growth&Rank2023-2027 Growth&RankGDP1.4%1.8%415Employment1.7%1.0%1514Population1.5%1.5%53Spending1.
321、9%2.7%82House Prices1.5%2.4%138Total InventoryYTD Net AbsorptionVacancy RateAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate237,528,793284,877 23.2%27.7%3.5%1,881,604$35.46 0%5%10%15%20%25%(4,000,000)(3,000,000)(2,000,000)(1,000,000)01,000,0002,000,0003,000,0004,000,00020182019
322、202020212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate23.2%23.2%10.5%Qtr/Year it happened Q4 2022Q4 2022Q4 2007Class A Lease Rates$35.46$36.33$21.15Qtr/Year it happenedQ4 2022Q4 2019Q1 2005Absorption,New Supply&Vacancy$45.05$31.22$22.98$26.14 Imbal
323、anceof supply and demand;Rental value fallingExpansionRental value growth slowingRecoveryRental value growth acceleratingConsolidationRental value bottoming outdenialconcernpessimismacceptancereliefoptimismexcitementvibrancekey momentkey moment612023 Top Office Markets|HoustonNet AbsorptionDeliverie
324、sVacancy RateWorkforce MetricsUnemployment RateProjected 2023-2027 office job growthWorkforce participation rate2.3%0.7%66.1%IndianapolisIndianaMarket Overview The Indianapolis metro area vacancy rate increased a minimal 14 basis points from 2021,to 18.1%.The CBD rate grew the most,444 basis points
325、since the beginning of the pandemic in Q2 2020.Tenants continue to demand and will pay a premium for high-quality space.Most notably,average rents for the Carmel submarket soared as a result of new construction,to more than$35.00 per square foot.Asking rents,while still up 1.0%year-over-year,are not
326、 keeping pace with inflation.Asking rates began to fall,by 1.4%in the fourth quarter,amid increasing vacancy and competition from subleases.Indianapolis stands out in the Midwest for its recovery from pandemic-related job losses,gaining a net 2.6%in jobs from Q1 2020 to Q4 2021.According to Oxford E
327、conomics,the citys job growth is expected to be 0.9%in 2023 and average 0.6%from 2024 to 2027,slightly higher than projected U.S.growth of 0.5%.Tenant Opportunities Sublease availability has more than doubled in the past year.The average rental gap between a sublease and direct availabilities is$4.2
328、5,allowing large users to lease discounted space in a desirable building.Landlords in traditional office parks,feeling the pressure as vacancy grows,are listening to tenant needs by investing in common spaces and amenities.Asking rents havent budged much since the onset of the pandemic.So instead,ow
329、ners offer tenants increased incentives and flexibility,including higher tenant improvement packages,longer free rent periods,and shorter terms.Tenant Challenges Top-tier Class A space in buildings with heavy amenity bases are quickly leased,leading tenants to new construction and causing asking rat
330、es in newer developments to soar.Even with increasing vacancies,landlords still have financial bottom lines they will not cross.Tenants need to temper expectations of getting a deal and instead focus on incentives and term-length flexibility.Despite increased demand to buy properties to gain control
331、 over an ever-changing office market,owner/user opportunities are very limited.62Colliers U.S.Research ReportOffice Metrics|Q4 2022Average Class A FSG RatesCBD SuburbanDirectDirectSubleaseSubleaseYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 ForecastYear-end 2023 Fo
332、recastYear-end 2023 ForecastYear-end 2023 ForecastMarket Cycle|Year-end 2023 ForecastAverage Annual Growth and Rank 2023 Growth&Rank2023-2027 Growth&RankGDP-0.3%1.3%4545Employment0.9%0.6%5038Population0.4%0.5%3736Spending0.8%1.7%4039House Prices2.3%2.2%516Total InventoryYTD Net AbsorptionVacancy Rat
333、eAvailability RateSublease Avail.RateUnder ConstructionAvg Class A Rate42,849,694(123,706)18.2%18.8%1.9%172,046$24.51 0%2%4%6%8%10%12%14%16%18%20%(500,000)(400,000)(300,000)(200,000)(100,000)0100,000200,000300,000400,000500,000200212022Net AbsorptionDeliveriesVacancy RateHistorical Metrics|Last 20 yearsCurrentHighLowVacancy Rate18.2%21.3%14.5%Qtr/Year it happenedQ4 2022Q4 2010Q2 2016Cla