The Top Office Markets Are:

We talk a lot about residential real estate, so today we are switching it up and reporting a bit on commercial real estate. Ten-X (formerly Auction.com), an online real estate marketplace, today released its latest Office Market Outlook report which highlights the sector’s top buy and sell markets. The long-term forecast report reveals San Francisco, San Jose, California, Orange County, California, New York City and Boston as markets investors may want to zero in on due to hot economies and positive employment growth. Meanwhile, investors may consider selling in Northern Virginia, Houston, Dallas, Pittsburgh and Long Island, New York, because of slowing rent gains and employment cutbacks stemming from slowing local economies.

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“On a national basis, office development remains relatively low, yet still high enough to match the current level of demand,” said Ten-X Chief Economist Peter Muoio. “While many office markets suffer from a lack of demand and little or no development, others remain hot with strong demand, low vacancies and rising rents, all of which equal new construction.”

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While Ten-X’s latest Office Market Outlook Report focuses on the markets investors need to pay special attention to, it also reveals how deal volume stabilized around $36 billion through the first three quarters of 2015 and how effective rents are up by 3.5 percent from a year ago — even approaching a pre-recession peak. Cap rates in Q3 2015 (flat from the prior quarter at 6.8 percent) are also discussed, as is the nationwide employment outlook and how that affects the office sector.

2015-2019 U.S. Office Projections:

Top 5 Buy Markets 2015 Rents (per square foot) 2019 Rents (per square foot) 2015 Vacancies (percentage) 2019 Vacancies
(percentage)
San Francisco $41.33 $47.77 10.8% 12%
San Jose, California $29 $33.72 17.4% 18.4%
New York City $55.67 $66.06 9.1% 10.1%
Orange County, California $22.81 $26.11 16.4% 16.3%
Boston $33.82 $37.44 12.9% 1.8%
Top 5 Sell Markets 2015 Rents
(per unit)
2019 Rents (per square foot) 2015 Vacancies
(percentage)
2019 Vacancies
(percentage)
Northern Virginia $27.26 $27.81 18.3% 20.8%
Houston $23.33 $23.13 16.7% 20.1%
Dallas $17.33 $17.55 22.2% 24.9%
Pittsburgh $18.16 $18.58 16.2% 16.6%
Long Island, New York $22.35 $23.34 13.9% 14%
2015 Rents
(per unit)
2019 Rents (per square foot) 2015 Vacancies
(percentage)
2019 Vacancies
(percentage)
U.S. $24.97 $27.45 16.5% 17%
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