HIGHLIGHTSNORTH AMERICA
WWW.COLLIERS.COM
Q4 2012 | OFFICE
KEY TAKEAWAYS• The North American and U.S. office vacancy rates declined further during Q4 2012 to 14.09%
and 14.63%, respectively. This was the fourth consecutive quarter of improvement for the 6.4 billion square feet of inventory in the 85 North American office markets tracked by Colliers.
• The market uncertainty and volatility of 2H2012 inhibited neither office leasing or transaction activity. Q4 North American net absorption of 21.1 MSF was more than double Q3’s 10.4 MSF. 2012 total net absorption was 50.7 MSF (roughly the office inventory of Ft. Lauderdale), the best since the 2008–2009 financial crisis.
• Major office property transactions totaled $77.6 billion in 2012, and surged at year-end 2012. Q4’s $29.1 billion in office building sales surpassed all prior quarters in 2012, according to Real Capital Analytics.
MARKET INDICATORSRelative to prior period
NORTH AMERICAN OFFICE MARKETSummary Statistics, Q4 2012
US Q4
2012
US Q1
2013*
Canada Q4
2012
Canada Q1
2013*
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE
*Projected
Construction is the change in Under Construction
Sq. Ft. By Region
2.00000000
1.00000000
2.00000000
Total_O�SF-Vacant_O�SF
Vacant_O�SF
Absorption Per Market (SF)q3 '12 - q4 '12
2,500,000
1,250,000
250,000-250,000
-1,250,000
-2,500,000
2 billion
1 billion
200 mil.
Occupied Sq. Ft.
Vacant Sq. Ft.
NORTH AMERICAN OFFICE VACANCY, INVENTORY AND ABSORPTION – Q4 2012
US CAN NA
VACANCY RATE 14.63% 6.80% 14.09%
Change From Q3 2012 -0.21% -0.26% -0.21%
ABSORPTION (MSF) 18.8 2.3 21.1
NEW CONSTRUCTION (MSF) 9.1 1.5 10.6
UNDER CONSTRUCTION (MSF) 39.5 11.3 50.8
ASKING RENTS PER SF US CAN
Downtown Class A $41.22 $51.42
Change from Q3 2012 0.17% 1.67%
Suburban Class A $26.21 $31.94
Change from Q3 2012 0.08% 0.16%
Unlocking 2013 Office Property PerformanceWhat will be the right combination in 2013?
K.C. CONWAY, MAI, CRE EMD | Market Analytics
P. 2 | COLLIERS INTERNATIONAL
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
KEY TAKEAWAYS (continued)
• Capital is migrating out of the risk curve for investment in office building assets in search of yield. This trend, reported by Colliers in previous 2012 reports, was corroborated by the recent Association of Foreign Investors in Real Estate report in which four of the top five markets for investment were in the U.S., including Houston for the first time.
• “ICEE” office markets are still hot. Intellectual Capital, Energy and Education (ICEE) markets continue to capture a disproportionate share of North American office absorption. During 2012, two-thirds of the 10 North American MSAs with the greatest absorption are characterized as ICEE markets. We see this trend continuing in 2013 as technology, energy and knowledge gateway centers remain the dominant generators of office-related employment.
• Medical Office has been a sleeper office sub-property type that saw a 30% growth in transaction activity in CY 2012 to $6.1 billion, or just shy of the 10% total $77.6 billion in CY 2012 office property sales. And, approximately half of the 71 MSF of office space under construction in the U.S. at the onset of 2013 is for medical-related use.
• Recovery in housing is an overlooked office demand driver that will gain additional traction in 2013.
-183.2
-130.9
-14.4
-0.5
0.0
13.3
24.4
138.9
190.2
203.3
330.0
365.7
-300.0 -200.0 -100.0 0.0 100.0 200.0 300.0 400.0
Ottawa, ON
Vancouver, BC
Victoria, BC
Halifax, NS
Winnipeg, MB
Edmonton, AB
Waterloo Region, ON
Saskatoon, SK
Regina, SK
Toronto, ON
Calgary, AB
Montréal, QC
Thousands
CANADIAN OFFICE ABSORPTION BY MARKET Q4 2012
IN THIS QUARTER’S REPORT, WE TAKE A LOOK AT THE COMBINATION TO UNLOCKING VALUE IN 2013:
RIGHT 14: In 2013 look for North American vacancy to drop below 14%, fueled by another 50 MSF of absorption.
LEFT 80:total office transactions above $80 billion
RIGHT 10: CMBS office property delinquencies rate below 10%
LEFT ICEE: Office job growth in Tech/Energy/Education MSAs outperforms FIRE MSAs for a third consecutive year
RIGHT MO: Medical Office is the emerging leader among office sub-property sectors
0.00
0.00
0.05
0.07
0.08
0.13
0.19
0.30
0.36
1.56
1.66
2.78
0.0 0.5 1.0 1.5 2.0 2.5 3.0
Edmonton, AB
Victoria, BC
Saskatoon, SK
Waterloo Region, ON
Regina, SK
Winnipeg, MB
Halifax, NS
Montréal, QC
Ottawa, ON
Vancouver, BC
Calgary, AB
Toronto, ON
Millions
CANADIAN OFFICE UNDER CONSTRUCTION BY MARKET Q4 2012
Note: Q3 data reported for Winnipeg, MB
See page 7 for details
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
COLLIERS INTERNATIONAL | P. 3
North American Downtown Markets:Excluding renewals, of the leases signed this quarter, did most tenants:
Hold Steady69.1%
Expand16.2%
Contract14.7%
North American Downtown Markets:What was the trend in Free Rent (in months)o�ered by CBD landlords this quarter?
Same80.9%Less
14.7%More4.4%
North American Downtown Markets:What was the trend for tenant improvement allowances o�ered by CBD landlords this quarter?
Hold Steady91.2%
Contract2.9%
Expand5.9%
North American Suburban Markets:Excluding renewals, of the leases signed this quarter in your CBD/downtown, did most tenants:
Hold Steady60.3%
Expand30.9%
Contract8.8%
IN BRIEF: OFFICE OUTLOOK 2013 2012 finished—and 2013 began—as Colliers observed in fall 2012: with progress on all fronts.
• North American Office Vacancy falls to just 14.09% at YE 2012.
• Net leasing activity best in five years: i) 21.1 MSF in Q4 2012; and ii) 50.7 MSF for CY 2012
• A 19% surge in office building sales surpasses 2004 transaction volume (3,000+ properties totaling approximately $78 billion during 2012)
Despite the harmful summer “UV (Uncertainty & Volatility) rays” during 1H2012, and lingering anxiety surrounding the U.S. fiscal debt crisis, ongoing Eurozone recession, the cost and logistics of implementing Obamacare, and anemic job growth (150,000/month) for two consecutive years, office real estate is persevering and returning to a state of balance. However, the recovery is broadening, both in the factors that have driven it over the past 12 months, as well as the markets that it’s reaching. No longer is the recovery confined to the CBDs of the “sexy six” core MSAs of New York, Boston, Chicago, Los Angeles, San Francisco and Seattle; it’s expanding to suburban submarkets and secondary MSAs. Real Capital Analytics’ Office Year In Review report noted a 31 percent increase in suburban office building sales during 2012, and a 40 percent increase in office building sales outside the six core MSAs. While this new interest is driven by a dearth of assets in the core MSAs and the search for yield in response to Federal Reserve monetary policy and cap rate compression, it has been office job growth in technology, energy and primary-education focused MSAs (what Colliers coined the Intellectual Capital, Energy and Education, or “ICEE” markets in 2011) that has defined which secondary markets were participating in this broadening recovery in the office property sector thus far.
In 2013, two other positive influences will impact this expansion: the housing recovery and growth in medical office demand. Both are broad-based across the U.S. and will have more of an effect on suburban office submarkets than CBDs. Why? First, professional services associated with a rise in new home construction and existing home sales activity will rebuild in proximity to this increasing housing activity in the suburbs. Second, our healthcare delivery model is shifting from one concentrated on expensive urban hospital campuses to less capital-intensive, suburban outpatient facilities.
The ICEE, housing, and medical office factors, along with the continuing search for yield by investors, add up to M.O.T.S (More Office To Secondaries) in 2013. As the diagram below depicts, rising absorption and modest new supply are driving vacancy down, and the requisite conditions to improve NOI are in place to absorb any interest rate risk in 2H2013.
U.S. OFFICE MARKET Q4 2010–Q4 2012
16.11 15.57 15.36 15.14 15.03 14.96 14.88 14.83 14.63
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
Q4 Q1 2011 2012
Q2 Q3 Q4 Q1 Q2 Q3 Q4
Vac
ancy
%
Absorption MSF Completions MSF Vacancy %
P. 4 | COLLIERS INTERNATIONAL
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
BEHIND THE STATISTICS & BEYOND THE BASICSScope of Colliers Office Outlook Report: Colliers monitors office property conditions in 85 North American markets from Toronto to Tampa, totaling 6.4 billion square feet of inventory. Approximately 93 percent (6.0 billion square feet) of this inventory is located in the United States.
The largest 20 North American markets (those with at least 100 MSF of existing inventory) constitute approximately 60 percent of the 6.4 billion square feet of North American office space tracked by Colliers. All of the >90 million-square-foot markets are located in the U.S., except one: Toronto.With respect to 2012 net absorption, just 10 of the 85 markets accounted for 53 percent of the 50.7 MSF of net absorption, and all but one market (Calgary) are located in the U.S. Below are the ten absorption-leading MSAs for 2012—seven of which are ICEE markets.
US CA NA
Vacancy Rate: 14.63% 6.80% 14.09%
Change from Q3 2012 -0.21% -0.26% -0.21%
VacancyFrom a regional perspective, Canada has the lowest average vacancy rate at 6.8 percent; and in the U.S., the Northeast has the lowest vacancy rate just shy of 14 percent. The highest vacancy rate among North American regions is the Western U.S. at 15.27 percent. The South and Midwest have average regional vacancy rates of 14.81% and 14.71%, respectively. Housing has been slow in its recovery in both these regions, and the job growth has been more focused on manufacturing, transportation and distribution, favoring industrial real estate over office.
AbsorptionThe final tally on 2012 net office absorption was not in the cards in mid-2012, when it appeared that tenants and businesses were pulling back from leasing activity driving absorption down 6% over the prior six-month period (2H2011). However, despite the market’s anxiety over the November 2012 election and the Fiscal Cliff, 2012’s net office absorption had its best performance since the 2008–2009 financial crisis. Q4 net absorption was more than double that for any prior quarter during 2012 (21.1 MSF in Q4 compared to 10.0 MSF for the rest of the year). Which markets outperformed and why? Examination of the top ten North American markets with respect to absorption in Q4 and YTD 2012 reveals the impact of ICEE employment drivers, commencement of a true housing recovery, and importance of having a nationally or regionally recognized medical center.
MSA 2012 ABSORPTION
1 Houston (ICEE) 4.50 MSF
2 Dallas (ICEE) 2.90 MSF
3 Atlanta (ICEE) 2.80 MSF
4 Detroit 2.75 MSF
5 Chicago 2.70 MSF
6 Calgary (ICEE) 2.5 MSF
7 Phoenix 2.4 MSF
8 Boston (ICEE) 2.2 MSF
9 Philadelphia (ICEE) 2.2 MSF
10 Seattle (ICEE) 2.2 MSF
ICEE MARKETS LEAD IN 2012 ABSORPTION
MSA Q4 2012 MSA CY 2012
1 Detroit (Auto + Housing)
1.66 MSF Houston 4.50 MSF (ICEE) + Medical Center
2 Phoenix 1.46 MSF Dallas 2.90 MSF (ICEE) + Medical Center
3 Chicago 1.13 MSF Atlanta (Housing Recovery)
2.80 MSF (ICEE) + Medical Center
4 Montreal (ICEE)
0.99 MSF Detroit 2.75 MSF Medical Center
5 Philadelphia (ICEE)
0.98 MSF Chicago 2.70 MSF Medical Center
6 Houston (ICEE)
0.93 MSF Calgary 2.5 MSF (ICEE)
7 Boston (ICEE)
0.93 MSF Phoenix (Housing Recovery)
2.4 MSF
8 Dallas (ICEE)
0.84 MSF Boston 2.2 MSF (ICEE) + Medical Center
9 Minneapolis 0.82 MSF Philadelphia 2.2 MSF (ICEE) + Medical Center
10 Sacramento 0.82 MSF Seattle 2.2 MSF (ICEE) + Medical Center
TOP MARKETS FOR ABSORPTION
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
COLLIERS INTERNATIONAL | P. 5
Looking at this list, several themes emerge:
• The overlapping seven MSAs: Seven of the top ten most active markets for leasing activity in Q4 were also among the ten most active MSAs for all of calendar 2012. Houston, Dallas, Detroit, Chicago, Phoenix, Boston, and Philadelphia are prominent in both categories.
• The predominance of ICEE: Seven of the top ten markets for net absorption in 2012 are MSAs with an ICEE employment profile (technology, energy and/or primary education).
• The increasing role of housing and medical office: However, only five of the top ten markets for Q4 leasing activity are ICEE MSAs. What explains the difference, and what explains the emergence of MSAs like Atlanta, Detroit and Phoenix? The answer is two-fold: 1) the real housing recovery is taking hold in even the most distressed housing markets, such as Atlanta, Detroit and Phoenix; and 2) high-profile medical centers are strongly impacting demand for medical office space: Eight of the leading MSAs for absorption in 2012 have nationally or regionally recognized medical centers.
Looking forward to 2013, the only brake on office leasing activity in key energy markets—Dallas, Denver, Houston, Oklahoma City, Philadelphia (impact of Bakken shale), and Calgary—will be the delayed delivery of new space under construction. Houston and Denver can’t complete new space fast enough to keep pace with demand. ICEE will also continue to be an important office space demand driver in markets like Atlanta and Detroit where auto technology is fueling demand for engineers, and the office space to house them. (In 2012, Porsche and General Motors both made material commitments to locating auto technology centers in Atlanta.) And, the housing recovery will benefit suburban office space demand as contractors and professional service providers (closing attorneys, architects, engineers, building inspectors, etc.) rebuild or expand their operations to service housing activity of approximately 1.0 million new units—after years of less than half that level of activity. Atlanta, Charlotte, Nashville, Phoenix, Tampa, and inland California markets will see the most benefit from this housing recovery in 2013. In aggregate, 2013 should surpass 2012’s 50 MSF of net absorption by conservative estimates of 15%–20%, or 57.5 to 60.0 MSF in total. Market forces will see 2H2013 disproportionately higher net leasing activity than 1H2013, as was the case in 2012.
Transaction ActivityTransactions of major office property were also uninhibited by 2H2012 uncertainty. There were more than 3,000 transactions in 2012, totaling $77.6 billion, with a noticeable surge at year-end 2012: the $29.1 billion in Q4 office building sales surpassed all prior quarters in 2012, according to Real Capital Analytics. As in recent years, New York, San Francisco, Los Angeles, Washington D.C., and Seattle accounted for approximately 50 percent of the total dollar volume of office building sales during 2012. Houston and Denver (two key ICEE MSAs) now rank among the top markets for office building transaction volume.
The $77.6 billion in office transaction activity from 2012 is likely to be surpassed in 2013, given the amount of idle domestic and foreign capital searching for yield in tangible assets, such as commercial real estate. The
Association of Foreign Investors in Real Estate’s annual 2013 Foreign Investment Survey ranked the U.S. as the top place overall to invest; four U.S. markets were among their top five picks, including Houston, which had never before made this report’s global ranking.
Construction ActivityTo assess the risk of overbuilding, new construction activity needs to be considered from three perspectives: 1) new supply as a percent of existing inventory; 2) geographic concentration; and 3) sub-property type concentration.
At the onset of 2013, approximately 78.5 MSF of new office supply is underway in the U.S. and Canada, according to Dodge Pipeline. That activity translates to a North American new supply to existing inventory ratio of 1.2%. Historically, only when this ratio passes 2.0% is it considered elevated and indicative of overbuilding risk. What’s more, the current supply-to-inventory ratio is actually much lower for most U.S. office markets due to geographic and sub-property type concentration.
With respect to sub-property type construction, 51% of the 78.5 MSF of total new supply is medical-office-related construction. Of the remaining 38.5 MSF, 17.55 MSF (45.7% of the non-medical office new supply) is concentrated in just five states. The following table delineates these geographic and sub-property type ratios:
Delineation New Supply (MSF) Ratio (%)
North America 78.5 100.0
Canada 7.2 9.2
United States 71.3 91.8
Office Property 78.5 100.0
Medical Office 40.0 51.0
Non-Medical Office 38.5 49.0
U.S. Non-Medical Office 38.5 100.0
Top 5 States 17.5 45.7
Texas 6.7 17.4
California 4.9 12.8
Pennsylvania 2.5 6.4
New York 2.0 5.2
New Jersey 1.5 3.9
P. 6 | COLLIERS INTERNATIONAL
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
ENGINEERING NEWS-RECORD’S CONSTRUCTION COST INDEX
YEAR JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC AVG
2013 9437 9453 Note: Construction Costs never dropped post 2007 & are rising at a faster pace.
2012 9176 9198 9268 9273 9290 9291 9324 9351 9341 9376 9398 9412 9308
2011 8938 8998 9011 9027 9035 9053 9080 9088 9116 9147 9173 9172 9070
2010 8660 8672 8671 8677 8761 8055 8844 8837 8836 8921 8951 8952 8799
2009 8549 8533 8534 8528 8574 8578 8566 8564 8586 8596 8592 8641 8570
2008 8090 8094 8109 8112 8141 8185 8293 8362 8557 8623 8602 8551 8310
2007 7880 7880 7856 7865 7942 7939 7959 8007 8050 8045 8092 8089 7966
2006 7660 7689 7692 7695 7691 7700 7721 7722 7763 7883 7911 7888 7751
2005 7297 7298 7309 7355 7398 7415 7422 7479 7540 7563 7630 7647 7446
2004 6825 6862 6957 7017 7065 7109 7126 7188 7298 7314 7312 7308 7115
2003 6581 6640 6627 6635 6642 6694 6695 6733 6741 6771 6794 6782 6694
2002 6462 6462 6502 6480 6512 6532 6605 6592 6589 6579 6578 6563 6538
2001 6281 6272 6279 6286 6288 6318 6404 6389 6391 6397 6410 6390 6343
2000 6130 6160 6202 6201 6233 6238 6225 6233 6224 6259 6266 6283 6221
INDEX METHODOLOGY: 200 hours of common labor at the 20-city average of common labor rates, plus 25 cwt of standard structural steel shapes at the mill price prior to 1996 and the fabricated 20-city price from 1996, plus 1.128 tons of portland cement at the 20-city price, plus 1,088 board-ft of 2x4 lumber at the 20-city price.
The good news is that the U.S. ratio of new supply to inventory (excluding medical office construction) is less than a one-half of one percent—the lowest since 2003. And, only 21 MSF of new construction is underway outside of the five most active states, where energy and technology companies, such as Exxon Mobil and Shell Energy in Texas and Endo Pharmaceutical in Pennsylvania, account for 60 percent of activity.
However, rising construction costs are a concern that spans all commercial property types. It may surprise many to learn that construction costs never actually declined during the 2008–2009 financial crisis and the ensuing recession. As documented by the Engineering-News Record, Construction, costs have risen 17% since the end of 2007, and are up over 5.0 percent since February 2011. Investors and developers considering new construction investments should budget construction cost increases at double the CPI for 2013 and 2014, due to pressures on labor and materials.
CAPITAL MARKETSWhat is better than improving office property type fundamentals? For those that purchased any of the 3,000 office properties that traded in 2012, the answer is availability of capital. Domestic and foreign sources are flush with capital ready to invest in tangible assets like real estate, that can offer 2.5 to 3.0 times the yield offered by the U.S. government’s 10-year Treasury bond. And, the CMBS debt markets are opening up again after four consecutive years of annual new issuance below $50 billion. Underwriting terms and pricing spreads have also compressed in favor of borrowers: Improving market conditions have enabled even properties with elevated vacancy rates to become financeable again due to the low DSCR hurdle provided by sub-5.0 percent interest rates and 90 percent LTVs. Declining CMBS delinquency rates have further aided new issuance interest, and have CMBS investors enthusiastic about 2013 new issuance increasing 50 percent over 2012’s $50 billion level to $75 billion. If you have tenants, and can meet a 1.4 DSCR using a 4.5% loan coupon, the capital markets are once again open to refinance your office building.
JAN ‘13 DEC ‘12 NOV ‘12 3 MON 6 MON 1 YEAR
Industrial 11.32 11.24 11.48 11.53 11.72 12.14
Lodging 11.77 11.73 12.24 11.24 13.06 12.09
Multifamily 13.43 13.98 14.21 14.26 15.69 15.39
Office 10.48 10.66 10.37 10.20 10.69 8.90
Retail 7.79 7.62 7.75 8.03 8.03 7.88
Source: Trepp – January 2013 CMBS Delinquency Report
PERCENTAGE 30+ DAYS DELINQUENT BY PROPERTY TYPE
8
10
Jan 2012
9.529.37
Mar 2012 May 2012 Jul 2012 Sep 2012 Nov 2012 Jan 2013
12
9.68
10.0410.16
10.3410.13
9.999.69 9.71 9.71
9.579.80
PERCENTAGE 30+ DAYS DELINQUENT BY PROPERTY TYPE
Source: Trepp – January 2013 CMBS Delinquency Report
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
COLLIERS INTERNATIONAL | P. 7
THE COMBINATION TO UNLOCKING 2013 OFFICE PROPERTY PERFORMANCE
RIGHT 14 – Vacancy: If the absorption momentum from 2H2012 carries over into 2013 and Congress can maneuver its fiscal debt obstacle
course in 1H2013, the North American office vacancy rate will decline below 14.0 percent for the first time since 2005. Office property investors are keenly focused on the need for improvement in NOI in office properties going forward to be positioned to absorb higher interest rate costs 3-5 years out. Cap rate compression has aided property values the past two years, but future value enhancement will have to be unlocked through NOI improvement (i.e., increasing occupancy and rental rates).
LEFT 80 – Office Transaction Activity:With improving office property fundamentals and cheap debt to leverage transactions to maximize yield, 2013 should see office
transaction activity surpass the $80 billion mark by as much as 20%. The opportunity to unlock value here is in quality assets in secondary ICEE markets, such as Atlanta, Austin, Baltimore (now a post-Panamax ready port), Denver, Fort Worth, and Houston.
RIGHT 10 – CMBS Office Delinquency:For the capital markets to contribute to the improving office property conditions, CMBS delinquency rates need to continue
on their downward trajectory and remain south of 10 percent overall. As new issuance increases to a level north of $50 billion (increases the denominator in the delinquency calculation), and special servicers continue to resolve in excess of $1.0 billion in delinquent or defaulted loans (decreases the numerator portion of the delinquency ratio calculation), CMBS delinquency is likely to remain below 10 percent. This trend needs to translate over to the office property sector. With a January CMBS office delinquency rate of 10.48%, this ratio should decline further, and maybe even drop below 10%, as mature legacy office property loans are finally able to refinance. CMBS delinquency below 10 percent is critical to capital market confidence and unlocking more opportunity for office property leverage in 2013.
LEFT ICEE – Office Demand Drivers:The greatest opportunity for value enhancement and yield will remain in those secondary markets with an ICEE employment
profile. Traditional FIRE (Finance Insurance and Real Estate) markets are going to face office absorption headwinds as financial institutions reduce operating costs and the amount of office space they occupy. Financial institutions will be returning office inventory to the market undermining recent improvement in vacancy. For this part of the combination, turn to ICEE vs. FIRE.
RIGHT MO – Medical Office:The role of medical office space in the overall office vacancy picture warrants monitoring in 2013, particularly as the Obama
administration’s healthcare legislation and mandated healthcare exchanges are implemented. Due to strong demand and an absence of much new supply since 2007, demand for medical office space has risen dramatically and is fueling a boom in new construction. The states with the most medical office construction activity are Texas, California, Maryland, New York, North Carolina and Ohio. Medical office offers an unlocked opportunity as contraction continues among traditional users of office space, such as financial services firms. Do your homework before jumping into this sub-property sector, though. Vacancy and rental rates vary widely, and this subsector lacks the same availability of data and transparency as the greater North American office market.
Houston
P. 8 | COLLIERS INTERNATIONAL
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
UNITED STATES | DOWNTOWN OFFICE | ALL INVENTORY
MARKETEXISTING
INVENTORY (SF) DEC 31, 2012
NEW SUPPLY Q4 2012
(SF)
UNDER CONSTRUCTION
(SF)
VACANCY RATE (%)
SEP 30, 2012
VACANCY RATE (%)
DEC 31, 2012
ABSORPTION Q4 2012
(SF)
NORTHEAST
Baltimore, MD 28,840,782 234,874 - 14.06 14.02 9,076
Boston, MA 60,725,404 98,096 2,435,000 14.08 13.06 616,698
Hartford, CT 9,769,060 - - 21.24 20.72 50,896
New York, NY – Downtown Manhattan 110,942,138 - 5,200,000 16.09 15.36 814,431
New York, NY – Midtown Manhattan 227,532,283 - 1,052,150 11.94 12.04 (226,585)
New York, NY – Midtown South Manhattan 165,368,697 - 850,000 7.96 8.03 (119,601)
Philadelphia, PA 43,133,883 654,000 - 11.17 10.76 178,159
Pittsburgh, PA 32,161,109 52,000 800,000 9.68 10.9 (129,087)
Stamford, CT 18,966,293 - - 19.55 21.00 (274,722)
Washington, DC 140,909,953 - 1,903,911 10.44 10.48 (59,655)
White Plains, NY 7,741,025 - - 15.19 15.78 (45,062)
Northeast Total 846,090,627 1,038,970 12,241,061 11.86 11.77 814,548
SOUTH
Atlanta, GA 49,933,614 433,822 450,000 17.04 16.94 47,727
Birmingham, AL* 4,338,335 - - 22.00 19.80 95,482
Charleston, SC 2,068,469 - 52,000 7.70 7.24 9,369
Charlotte, NC 22,511,630 828,831 - 8.80 7.94 193,649
Columbia, SC 4,490,309 - - 16.80 14.21 116,125
Dallas, TX 34,744,566 204,109 - 26.98 27.58 (208,846)
Ft. Lauderdale-Broward, FL 8,003,061 - - 16.49 16.33 12,534
Ft. Worth, TX 10,400,974 - 154,801 13.05 12.14 94,885
Greenville, SC 3,143,679 - 235,000 12.24 15.68 (107,938)
Houston, TX 36,514,081 50,000 - 14.45 13.72 269,002
Jacksonville, FL 15,994,027 73,423 - 14.66 14.42 30,994
Little Rock, AR 6,422,699 - - 11.30 12.48 (22,714)
Louisville, KY 43,630,770 300,000 - 11.80 11.89 228,712
Memphis, TN 6,108,640 - 26,000 14.77 14.66 6,481
Miami-Dade, FL 18,491,614 33,930 - 18.29 18.36 (12,903)
Nashville, TN 12,087,245 48,000 - 14.76 13.52 167,473
Orlando, FL 12,744,796 - - 11.83 11.86 (3,379)
Raleigh/Durham/Chapel Hill, NC 13,657,917 - - 6.49 6.08 55,964
Richmond, VA 17,066,905 - 112,000 10.76 10.70 10,479
Savannah, GA 825,240 72,072 - 15.21 14.18 68,561
Tampa Bay, FL 8,607,635 66,927 - 12.91 13.36 (39,132)
West Palm Beach/Palm Beach County, FL 10,130,113 - - 17.79 16.69 110,753
South Total 341,916,319 2,111,114 1,029,801 15.10 14.88 1,123,278
*Absorption and vacancy figures for Birmingham account for direct space only
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
COLLIERS INTERNATIONAL | P. 9
UNITED STATES | DOWNTOWN OFFICE | ALL INVENTORY
MARKETEXISTING
INVENTORY (SF) DEC 31, 2012
NEW SUPPLY Q4 2012
(SF)
UNDER CONSTRUCTION
(SF)
VACANCY RATE (%)
SEP 30, 2012
VACANCY RATE (%)
DEC 31, 2012
ABSORPTION Q4 2012
(SF)
MIDWEST
Chicago, IL 159,986,353 297,763 - 13.45 13.23 347,362
Cincinnati, OH 18,047,286 - - 18.12 18.09 5,408
Cleveland, OH 34,140,929 710,100 475,000 19.26 19.07 66,433
Columbus, OH 19,597,350 395,500 280,000 11.00 11.90 36,469
Detroit, MI 26,153,283 1,165,425 - 21.04 20.88 42,065
Grand Rapids, MI 5,461,588 - - 23.24 22.34 49,026
Indianapolis, IN 23,453,317 - 18,000 13.71 13.34 94,650
Kansas City, MO 34,664,036 - 215,000 14.60 14.43 61,577
Milwaukee, WI 19,887,288 145,000 - 13.71 13.39 62,655
Minneapolis, MN 31,840,763 - - 15.13 14.98 46,977
Omaha, NE 6,358,928 60,000 - 7.16 8.53 9,192
St. Louis, MO 27,493,907 - - 16.52 16.66 (37,405)
St. Paul, MN 12,904,838 - - 13.85 13.82 4,013
Midwest Total 419,989,866 2,773,788 988,000 14.98 14.86 788,422
WEST
Bakersfield, CA 3,020,093 - - 8.86 7.62 44,571
Boise, ID 3,741,536 241,208 260,000 10.95 10.24 66,851
Denver, CO 34,251,235 39,656 112,000 12.43 12.26 70,574
Fresno, CA 3,284,713 - - 11.40 11.66 (8,393)
Honolulu, HI 7,119,083 - - 14.00 13.21 55,973
Las Vegas, NV 4,192,128 - 458,200 12.31 12.37 (2,488)
Los Angeles, CA 31,942,700 418,600 229,500 18.46 19.03 (178,200)
Oakland, CA 16,891,513 - - 12.90 13.45 (92,321)
Phoenix, AZ 21,016,381 203,609 - 21.30 21.52 29,081
Portland, OR 33,287,613 100,083 - 9.77 9.89 (40,940)
Reno, NV 1,388,078 - - 19.58 19.50 9,309
Sacramento, CA 18,949,701 130,000 - 9.80 9.59 39,662
San Diego, CA 10,149,972 - - 20.14 19.84 30,448
San Francisco, CA 88,179,309 189,835 2,510,615 10.51 10.28 387,187
San Jose/Silicon Valley 7,601,845 318,000 - 23.69 24.73 (81,425)
Seattle/Puget Sound, WA 56,216,928 340,563 625,501 12.01 12.04 284,779
Stockton, CA 8,221,819 - - 18.86 18.16 58,138
Walnut Creek/Pleasanton, CA 12,561,714 - - 16.26 15.71 (4,731)
West Total 362,016,361 1,981,554 4,195,816 13.32 13.29 668,075
U.S. TOTAL 1,970,013,173 7,905,426 18,454,678 13.36 13.25 3,394,323
(continued)
P. 10 | COLLIERS INTERNATIONAL
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
UNITED STATES | DOWNTOWN OFFICE | CLASS A
MARKETEXISTING
INVENTORY (SF) DEC 31, 2012
AVG ANNUAL QUOTED RENT
(USD PSF) DEC 31, 2012
QUARTERLY CHANGE IN RENT
(%)
ANNUAL CHANGE IN RENT
(%)
VACANCY RATE (%)
SEP 30, 2012
VACANCY RATE (%)
DEC 31, 2012
ABSORPTION Q4 2012
(SF)
NORTHEAST
Baltimore, MD 13,228,621 14.93 0.7 5.9 14.93 14.92 1,726
Boston, MA 41,333,537 13.92 1.5 1.7 13.92 13.07 349,709
Hartford, CT 6,660,379 22.39 -1.0 -0.3 22.39 21.47 60,970
New York, NY – Downtown Manhattan 77,672,777 18.75 -0.1 -2.2 18.75 17.54 940,170
New York, NY – Midtown Manhattan 192,290,701 12.60 -1.2 0.7 12.60 12.76 (297,418)
New York, NY – Midtown South Manhattan 32,865,338 6.79 0.1 11.7 6.79 8.33 (504,207)
Philadelphia, PA 32,656,957 10.59 -0.5 - 10.59 10.52 19,612
Pittsburgh, PA 18,279,017 7.64 2.9 4.1 7.64 7.13 29,859
Stamford, CT 13,299,364 21.77 -1.9 -6.4 21.77 23.01 (164,957)
Washington, DC 85,704,698 11.90 0.3 2.1 11.90 11.92 (20,351)
White Plains, NY 4,885,999 17.00 -2.0 -4.3 17.00 18.10 (53,855)
Northeast Total 518,877,388 13.30 -0.2 1.2 13.30 13.22 361,258
SOUTH
Atlanta, GA 30,000,462 18.87 0.1 -1.3 18.87 18.53 101,522
Birmingham, AL* 3,322,353 11.56 - 1.0 11.56 11.34 7,962
Charleston, SC 1,043,494 3.33 1.2 10.1 3.33 2.55 8,134
Charlotte, NC 16,040,594 10.40 1.9 1.4 10.40 9.11 208,132
Columbia, SC 1,926,914 15.02 3.9 4.1 15.02 10.13 94,216
Dallas, TX 22,693,924 23.68 0.9 2.3 23.68 24.69 (230,826)
Ft. Lauderdale-Broward, FL 4,454,238 21.30 -0.4 -0.5 21.30 21.27 1,229
Ft. Worth, TX 5,850,052 11.69 0.9 0.9 11.69 10.54 67,382
Greenville, SC 1,871,715 8.83 6.1 -3.5 8.83 15.32 (121,511)
Houston, TX 26,119,764 10.69 0.4 5.2 10.69 9.75 244,855
Jacksonville, FL 6,830,482 15.40 0.3 2.0 15.40 14.97 29,314
Little Rock, AR 2,636,353 9.72 0.2 0.6 9.72 11.83 (3,212)
Louisville, KY 10,560,672 13.05 0.4 -4.6 13.05 14.57 100,131
Memphis, TN 1,966,542 18.26 -0.1 0.3 18.26 18.63 (7,338)
Miami-Dade, FL 9,758,448 21.50 -0.9 -3.2 21.50 21.31 18,821
Nashville, TN 3,953,423 20.50 -1.5 -6.7 20.50 18.37 84,077
Orlando, FL 5,784,868 16.57 -1.2 -2.1 16.57 15.93 37,028
Raleigh/Durham/Chapel Hill, NC 5,633,684 8.74 0.4 -3.1 8.74 8.33 22,893
Richmond, VA 5,895,522 7.46 0.1 4.6 7.46 7.37 4,979
Savannah, GA 642,460 13.02 7.5 7.2 13.02 7.65 97,201
Tampa Bay, FL 4,791,174 13.98 -0.5 2.0 13.98 15.22 (59,515)
West Palm Beach/Palm Beach County, FL 3,337,557 22.51 -0.3 3.2 22.51 20.69 60,785
South Total 175,114,695 15.62 0.7 1.0 15.62 15.40 766,259
*Absorption and vacancy figures for Birmingham account for direct space only
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
COLLIERS INTERNATIONAL | P. 11
UNITED STATES | DOWNTOWN OFFICE | CLASS A
MARKETEXISTING
INVENTORY (SF) DEC 31, 2012
AVG ANNUAL QUOTED RENT
(USD PSF) DEC 31, 2012
QUARTERLY CHANGE IN RENT
(%)
ANNUAL CHANGE IN RENT
(%)
VACANCY RATE (%)
SEP 30, 2012
VACANCY RATE (%)
DEC 31, 2012
ABSORPTION Q4 2012
(SF)
MIDWEST
Chicago, IL 60,846,877 37.36 0.3 0.7 14.52 14.05 284,974
Cincinnati, OH 8,815,068 21.96 - -6.0 19.11 22.06 (260,407)
Cleveland, OH 9,728,269 21.33 -0.3 6.3 13.68 13.34 32,992
Columbus, OH 8,106,210 18.52 -1.4 -1.5 12.15 11.14 82,018
Detroit, MI 9,120,878 22.80 -0.2 -3.1 17.14 17.07 6,139
Grand Rapids, MI 1,542,050 19.28 0.1 -8.1 22.34 19.56 42,756
Indianapolis, IN 9,928,804 19.03 2.0 -1.2 18.92 18.30 50,070
Kansas City, MO 10,276,792 18.90 -0.3 0.7 19.91 19.89 2,029
Milwaukee, WI 5,411,144 20.17 2.8 0.9 13.09 12.07 55,208
Minneapolis, MN 13,618,828 16.52 6.9 15.3 12.33 11.78 75,272
Omaha, NE 3,417,878 19.62 -0.6 1.7 4.22 4.54 (10,025)
St. Louis, MO 10,678,000 17.73 0.5 -0.3 13.53 13.78 (25,983)
St. Paul, MN 2,773,960 13.35 -0.4 17.8 9.64 10.19 (15,440)
Midwest Total 154,264,758 27.20 0.6 0.8 14.85 14.64 319,603
WEST
Bakersfield, CA 699,798 17.40 - - 4.35 3.86 3,413
Boise, ID 2,228,115 20.12 -2.6 8.1 7.05 5.21 200,470
Denver, CO 21,238,158 30.0 0.1 4.2 13.54 13.02 110,767
Fresno, CA 1,058,046 24.00 - -7.7 12.37 12.37 -
Honolulu, HI 4,966,720 34.45 0.7 -1.0 13.34 12.23 43,171
Las Vegas, NV 807,588 31.32 0.4 0.8 10.67 11.60 (7,551)
Los Angeles, CA 17,749,600 36.12 - -6.2 16.46 18.00 (267,100)
Oakland, CA 10,198,245 30.72 -3.0 -3.0 9.86 11.22 (138,461)
Phoenix, AZ 9,459,620 22.86 - 1.5 20.05 21.15 (104,497)
Portland, OR 13,189,621 24.89 - - 8.76 8.78 (3,087)
Reno, NV 557,635 21.31 -1.3 -7.5 20.87 18.03 15,817
Sacramento, CA 9,062,614 32.40 - - 8.34 8.08 23,514
San Diego, CA 7,254,266 28.20 - -0.4 17.67 17.37 21,659
San Francisco, CA 56,642,612 49.56 5.6 20.5 10.31 9.71 508,711
San Jose/Silicon Valley 3,365,127 31.83 -6.6 -0.7 25.84 27.02 (40,361)
Seattle/Puget Sound, WA 32,531,336 30.96 2.1 3.4 14.12 13.60 428,837
Stockton, CA 2,790,574 20.16 - -4.5 27.05 26.45 16,621
Walnut Creek/Pleasanton, CA 8,233,222 27.72 0.4 0.9 14.97 15.44 (38,786)
West Total 202,032,897 35.43 - 0.8 13.07 12.96 773,137
U.S. TOTAL 1,050,289,738 41.22 0.2 1.0 13.87 13.74 2,220,257
(continued)
P. 12 | COLLIERS INTERNATIONAL
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
UNITED STATES | SUBURBAN OFFICE | ALL INVENTORY
MARKETEXISTING
INVENTORY (SF) DEC 31, 2012
NEW SUPPLY Q4 2012
(SF)
UNDER CONSTRUCTION
(SF)
VACANCY RATE (%)
SEP 30, 2012
VACANCY RATE (%)
DEC 31, 2012
ABSORPTION Q4 2012
(SF)
NORTHEAST
Baltimore, MD 86,786,838 234,874 1,163,140 12.65 12.44 386,882
Boston, MA 110,971,331 98,096 1,563,851 19.37 19.10 314,921
Fairfield County, CT 41,493,424 74,726 - 12.56 12.88 -68,762
Hartford, CT 12,251,551 - - 14.96 14.44 63,815
Long Island, NY 71,732,215 768,000 55,000 10.71 10.66 718,538
New Jersey – Central 103,723,820 315,670 116,057 20.92 20.70 487,335
New Jersey – Northern 137,967,000 30,000 737,600 21.03 21.09 -52,196
Philadelphia, PA 110,578,994 654,000 322,005 15.17 14.94 802,694
Pittsburgh, PA 89,275,846 52,000 764,395 7.57 7.06 46,342
Washington, DC 283,566,213 - - 15.44 15.83 -1,118,510
Westchester County, NY 37,071,839 - - 15.05 15.39 -126,457
Northeast Total 1,085,419,071 2,227,366 4,722,048 15.73 15.73 1,454,602
SOUTH
Atlanta, GA 171,243,642 433,822 674,097 17.04 17.03 363,892
Birmingham, AL* 14,213,847 - - 18.48 17.93 77,062
Charleston, SC 9,379,515 - 75,000 15.00 14.79 35,516
Charlotte, NC 75,365,988 828,831 108,596 13.31 13.45 626,394
Columbia, SC 5,016,258 - - 24.04 25.61 -79,155
Dallas, TX 241,020,318 204,109 1,027,817 15.94 15.57 1,050,842
Ft. Lauderdale-Broward, FL 42,982,403 - 806,572 13.73 13.71 6,984
Ft. Worth, TX 20,158,197 - 144,233 7.73 7.25 97,536
Greenville, SC 5,093,005 - - 18.52 18.10 21,540
Houston, TX 159,079,088 50,000 4,394,827 14.20 13.81 664,309
Jacksonville, FL 44,916,088 73,423 2,607 13.36 13.26 96,049
Little Rock, AR 7,625,053 - 46,000 12.58 12.45 -43,423
Memphis, TN 27,443,840 - 113,392 14.82 14.46 100,717
Miami-Dade, FL 63,016,310 33,930 162,063 13.96 13.64 229,620
Nashville, TN 14,842,231 28,000 - 7.49 7.51 23,248
Orlando, FL 53,927,670 - 87,895 15.58 14.95 431,065
Raleigh/Durham/Chapel Hill, NC 64,136,382 - - 14.15 13.97 119,064
Richmond, VA 34,412,752 - - 11.73 12.21 -164,213
Savannah, GA 1,534,208 - - 23.69 18.94 48,350
Tampa Bay, FL 71,219,715 66,927 269,272 16.08 15.69 404,271
West Palm Beach/Palm Beach County, FL 28,655,101 - 30,000 19.18 18.30 251,828
South Total 1,155,281,611 1,719,042 7,942,371 15.03 14.78 4,361,496
*Absorption and vacancy figures for Birmingham account for direct space only
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
COLLIERS INTERNATIONAL | P. 13
UNITED STATES | SUBURBAN OFFICE | ALL INVENTORY
MARKETEXISTING
INVENTORY (SF) DEC 31, 2012
NEW SUPPLY Q4 2012
(SF)
UNDER CONSTRUCTION
(SF)
VACANCY RATE (%)
SEP 30, 2012
VACANCY RATE (%)
DEC 31, 2012
ABSORPTION Q4 2012
(SF)
MIDWEST
Chicago, IL 157,535,389 297,763 - 17.07 16.73 783,012
Cincinnati, OH 35,718,611 - - 20.10 21.01 -326,094
Cleveland, OH 107,371,768 710,100 788,866 9.94 9.97 605,183
Columbus, OH 43,849,812 156,500 111,000 11.88 12.06 56,993
Detroit, MI 137,172,750 1,165,425 31,232 19.08 18.59 1,619,025
Grand Rapids, MI 11,557,283 - 382,000 23.28 23.19 10,173
Indianapolis, IN 45,740,597 - 75,000 13.29 13.15 90,627
Kansas City, MO 56,941,429 - 1,510,765 13.45 13.27 103,240
Milwaukee, WI 33,034,701 145,000 - 11.51 11.70 -59,970
Minneapolis, MN 82,273,735 - 931,700 14.33 13.39 776,569
Omaha, NE 20,597,840 60,000 180,000 12.12 12.10 72,609
St. Louis, MO 55,244,405 - - 11.53 11.08 247,729
Midwest Total 787,038,320 2,534,788 4,010,563 14.86 14.62 3,979,096
WEST
Bakersfield, CA 5,994,188 - 81,594 6.60 6.98 -22,693
Boise, ID 11,093,685 196,235 - 18.77 18.98 135,657
Denver, CO 104,416,469 - 745,767 14.29 14.08 126,306
Fairfield, CA 4,877,417 - - 25.28 25.70 -20,478
Fresno, CA 18,008,675 - 70,000 12.99 13.25 -47,197
Honolulu, HI 7,490,275 - 40,000 12.89 12.88 9,218
Las Vegas, NV 35,115,687 - 42,123 25.55 24.64 320,637
Los Angeles, CA 168,909,400 418,600 1,213,700 17.76 17.78 410,100
Los Angeles – Inland Empire, CA 21,626,300 - - 22.84 21.25 344,823
Oakland, CA 16,165,151 - - 19.54 18.11 231,011
Orange County, CA 80,477,400 - 380,000 17.08 16.61 315,300
Phoenix, AZ 109,902,559 108,609 375,482 21.58 20.36 1,435,184
Portland, OR 44,445,096 100,083 163,874 11.71 11.19 322,024
Reno, NV 5,547,351 - - 16.37 15.99 38,829
Sacramento, CA 73,472,600 130,000 257,451 18.74 17.82 781,917
San Diego, CA 70,818,124 - 946,457 13.92 13.59 235,680
San Francisco Peninsula 35,142,199 18,781 - 13.69 14.03 -102,740
San Jose/Silicon Valley 54,745,633 318,000 - 12.86 12.42 390,701
Seattle/Puget Sound, WA 74,567,897 - 82,950 12.47 10.98 370,396
Walnut Creek/Pleasanton, CA 32,987,041 - - 12.77 11.73 343,070
West Total 975,803,147 1,290,308 4,399,398 16.56 16.00 5,617,745
U.S. TOTAL 4,003,542,149 7,771,504 21,074,380 15.56 15.31 15,412,939
(continued)
P. 14 | COLLIERS INTERNATIONAL
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
UNITED STATES | SUBURBAN OFFICE | CLASS A
MARKETEXISTING
INVENTORY (SF) DEC 31, 2012
AVERAGE ANNUAL QUOTED RENT (USD PSF)
DEC 31, 2012
QUARTERLY CHANGE IN RENT (%)
ANNUAL CHANGE IN RENT (%)
VACANCY RATE (%)
SEP 30, 2012
VACANCY RATE (%)
DEC 31, 2012
ABSORPTION Q4 2012
(SF)
NORTHEAST
Baltimore, MD 30,282,850 24.87 -1.03 -3.23 15.91 15.37 362,930
Boston, MA 47,074,119 24.74 -1.55 -3.06 17.80 17.88 -40,309
Fairfield County, CT 17,597,470 35.35 -2.67 9.24 13.25 13.77 -27,217
Hartford, CT 7,906,889 20.25 -2.78 -3.39 13.53 12.75 61,867
Long Island, NY 23,077,975 30.47 0.20 1.84 11.46 11.56 -21,446
New Jersey – Central 60,391,076 26.52 -0.86 -1.78 22.45 21.95 546,337
New Jersey – Northern 84,682,274 26.28 -1.05 -1.28 20.62 20.42 193,221
Philadelphia, PA 68,076,073 24.73 0.91 2.96 14.54 14.27 740,149
Pittsburgh, PA 17,179,193 21.95 0.87 2.09 6.49 5.30 148,053
Washington, DC 132,646,603 32.03 -1.39 -1.51 15.26 15.83 -745,611
Westchester County, NY 17,442,819 26.42 -0.38 -2.87 18.72 19.26 -94,133
Northeast Total 506,357,341 27.65 -0.92 -0.61 16.74 16.73 1,123,841
SOUTH
Atlanta, GA 79,312,905 22.34 0.68 0.81 16.61 16.34 527,253
Birmingham, AL* 8,943,059 21.09 -0.80 0.43 16.81 15.96 76,173
Charleston, SC 3,942,925 23.18 0.17 -2.56 11.45 11.49 809
Charlotte, NC 19,403,225 22.80 0.62 6.19 15.18 16.61 410,325
Columbia, SC 973,189 16.55 -1.55 -4.00 13.77 14.93 -11,304
Dallas, TX 91,055,763 23.30 - 1.30 16.20 15.50 634,612
Ft. Lauderdale-Broward, FL 10,963,059 27.14 0.04 -2.44 18.82 18.45 40,574
Ft. Worth, TX 2,638,353 24.00 - -2.04 3.89 3.85 1,032
Greenville, SC 2,245,798 17.32 1.88 -0.40 15.60 12.66 66,172
Houston, TX 66,845,822 28.20 3.26 3.15 12.00 11.44 379,470
Jacksonville, FL 9,206,865 19.58 - -3.59 8.46 8.32 13,028
Little Rock, AR 3,027,212 19.25 0.94 3.89 18.98 18.71 9,217
Memphis, TN 8,113,880 21.44 -0.79 -1.02 8.42 8.10 25,608
Miami-Dade, FL 16,308,475 30.52 0.07 -3.05 19.81 18.70 180,756
Nashville, TN 7,288,561 23.23 0.13 6.32 5.34 5.87 -39,206
Orlando, FL 16,827,628 20.93 -1.60 -3.77 21.08 19.88 201,731
Raleigh/Durham/Chapel Hill, NC 24,532,197 20.76 -0.48 -2.21 14.39 13.76 154,190
Richmond, VA 13,564,697 18.78 -0.05 0.48 14.24 13.60 86,395
Savannah, GA 490,035 22.70 0.18 0.35 23.70 17.79 28,932
Tampa Bay, FL 23,629,402 22.78 -0.35 -2.15 16.07 14.48 214,151
West Palm Beach/Palm Beach County, FL 9,163,879 29.68 -1.53 -2.94 18.14 17.23 83,092
South Total 418,476,929 23.80 0.61 0.57 15.23 14.70 3,083,010
*Absorption and vacancy figures for Birmingham account for direct space only
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
COLLIERS INTERNATIONAL | P. 15
UNITED STATES | SUBURBAN OFFICE | CLASS A
MARKETEXISTING
INVENTORY (SF) DEC 31, 2012
AVERAGE ANNUAL QUOTED RENT (USD PSF)
DEC 31, 2012
QUARTERLY CHANGE IN RENT (%)
ANNUAL CHANGE IN RENT (%)
VACANCY RATE (%)
SEP 30, 2012
VACANCY RATE (%)
DEC 31, 2012
ABSORPTION Q4 2012
(SF)
MIDWEST
Chicago, IL 76,979,405 27.00 - 1.89 18.23 17.70 403,696
Cincinnati, OH 15,916,607 20.54 0.39 0.20 19.40 20.31 -144,815
Cleveland, OH 13,701,278 21.34 -0.33 0.05 10.44 10.05 689,788
Columbus, OH 18,133,071 19.05 0.37 2.14 10.57 11.50 -27,569
Detroit, MI 33,643,164 20.52 -0.24 -2.01 15.52 15.72 -67,275
Grand Rapids, MI 2,206,876 17.50 -2.78 -9.00 28.84 28.22 13,520
Indianapolis, IN 12,403,471 18.00 0.39 1.58 17.72 17.10 85,772
Kansas City, MO 14,734,064 20.30 0.30 -1.93 11.87 11.78 14,100
Milwaukee, WI 5,912,609 22.32 9.90 9.79 10.93 10.58 20,889
Minneapolis, MN 26,674,839 13.80 -1.43 -0.50 16.12 15.62 131,289
Omaha, NE 4,342,362 26.15 - 0.85 5.07 5.01 104,815
St. Louis, MO 25,996,388 21.89 0.05 -1.40 10.62 10.79 -45,320
Midwest Total 250,644,134 21.91 0.14 0.77 15.26 15.12 1,178,890
WEST
Bakersfield, CA 2,697,867 24.00 - - 4.74 5.28 -14,426
Boise, ID 3,108,058 15.12 0.13 0.47 14.14 13.57 17,779
Denver, CO 34,321,698 23.74 1.32 4.49 11.95 11.96 -3,198
Fairfield, CA 1,917,086 25.61 -2.07 2.11 26.88 29.77 -55,433
Fresno, CA 4,017,507 25.20 - - 17.26 18.85 -63,910
Las Vegas, NV 4,979,076 29.28 - -1.61 34.96 33.02 96,889
Los Angeles, CA 102,533,800 33.96 0.71 1.43 17.26 17.20 455,100
Los Angeles – Inland Empire, CA 5,194,800 23.52 1.03 2.08 27.39 23.62 195,866
Oakland, CA 3,870,228 26.40 - -0.90 26.20 24.23 76,225
Orange County, CA 32,834,800 25.56 -0.93 -0.47 17.93 16.96 253,700
Phoenix, AZ 30,242,049 23.29 0.26 -1.06 23.12 20.31 918,319
Portland, OR 11,012,912 22.95 -0.35 0.31 14.02 14.06 -4,348
Reno, NV 2,989,478 18.62 - -7.09 13.90 13.91 34,636
Sacramento, CA 16,324,396 22.20 -0.54 -1.60 21.51 20.99 185,646
San Diego, CA 23,418,247 32.88 - 4.18 11.52 10.73 184,465
San Francisco Peninsula 22,281,029 41.64 -0.29 10.16 13.53 14.09 -109,899
San Jose/Silicon Valley 27,077,797 39.07 -1.34 8.17 14.02 14.43 145,393
Seattle/Puget Sound, WA 20,850,141 31.68 0.86 4.55 10.38 8.57 132,984
Walnut Creek/Pleasanton, CA 15,972,148 25.92 3.85 14.89 10.33 8.98 216,974
West Total 365,643,117 30.38 0.35 3.37 16.25 15.68 2,662,762
U.S. TOTAL 1,541,121,521 26.21 -0.08 0.82 15.97 15.67 8,048,503
(continued)
P. 16 | COLLIERS INTERNATIONAL
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
CANADA | DOWNTOWN OFFICE | ALL INVENTORY
MARKETEXISTING
INVENTORY (SF) DEC 31, 2012
NEW SUPPLY Q4 2012
(SF)
UNDERCONSTRUCTION
(SF)
VACANCY RATE (%)
SEP 30, 2012
VACANCY RATE (%)
DEC 31, 2012
ABSORPTION Q4 2012
(SF)
Calgary, AB 39,567,994 256,657 1,661,000 4.52 3.68 330,012
Edmonton, AB 11,260,840 117,768 - 8.42 8.30 13,280
Halifax, NS 4,684,110 38,948 190,000 11.44 11.45 -470
Montréal, QC 49,428,581 127,000 304,000 5.01 4.27 365,660
Ottawa, ON 15,526,942 87,700 360,000 5.57 6.75 -183,170
Regina, SK 3,801,824 220,000 80,000 1.92 2.59 190,164
Saskatoon, SK* 2,319,464 109,000 50,000 3.25 3.34 138,900
Toronto, ON 69,531,181 464,455 2,784,698 5.10 4.58 203,259
Vancouver, BC 24,408,488 20,299 1,563,810 3.50 4.03 -130,891
Victoria, BC 4,952,849 80,455 - 7.79 8.28 -14,428
Waterloo Region, ON 3,772,982 - 66,075 14.87 14.22 24,360
Winnipeg, MB 11,188,648 - 130,375 6.59 6.59 -
CANADA TOTAL 240,443,903 1,522,282 7,189,958 5.35 5.04 936,676
*Saskatoon tracks but does not submit suburban inventory figures for this report
CANADA | DOWNTOWN OFFICE | CLASS A
MARKETEXISTING
INVENTORY (SF) DEC 31, 2012
AVG ANNUAL QUOTED RENT
(CAD PSF) DEC 31, 2012
QUARTERLY CHANGE
IN RENT (%)
ANNUAL CHANGE
IN RENT (%)
VACANCY RATE (%)
SEP 30, 2012
VACANCY RATE (%)
DEC 31, 2012
ABSORPTION Q4 2012 (SF)
Calgary, AB 26,727,389 60.21 - 8.7 1.46 1.84 -102,756
Edmonton, AB 9,074,913 42.02 0.7 5.3 8.27 8.45 -16,593
Halifax, NS 1,933,746 32.35 - 1.7 9.06 8.95 2,144
Montréal, QC 23,075,596 45.00 7.1 7.1 4.49 4.13 82,257
Ottawa, ON 9,535,830 51.60 3.5 6.7 4.52 4.92 -38,670
Regina, SK 1,094,911 42.00 4.0 13.5 0.96 1.42 212,815
Saskatoon, SK 570,571 40.00 5.3 8.1 1.84 3.59 67,509
Toronto, ON 40,130,328 54.28 0.6 2.4 5.70 4.70 187,396
Vancouver, BC 10,029,234 54.57 -1.1 0.1 2.08 2.65 -60,827
Victoria, BC 513,808 35.00 -2.8 -7.4 9.43 4.88 39
Waterloo Region, ON 1,559,429 25.66 - -0.8 12.48 12.01 7,282
Winnipeg, MB 2,619,428 33.50 - N/A 4.76 4.76 -
CANADA TOTAL 126,865,183 51.42 1.7 4.5 4.46 4.24 340,596
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
COLLIERS INTERNATIONAL | P. 17
CANADA | SUBURBAN OFFICE | ALL INVENTORY
MARKETEXISTING
INVENTORY (SF) DEC 31, 2012
NEW SUPPLY Q4 2012
(SF)
UNDER CONSTRUCTION
(SF)
VACANCY RATE (%)
SEP 30, 2012
VACANCY RATE (%)
DEC 31, 2012
ABSORPTION Q4 2012
(SF)
Calgary, AB 24,444,605 256,657 - 8.54 9.34 40,263
Edmonton, AB 9,110,948 117,768 315,150 11.24 11.13 103,952
Halifax, NS 6,545,973 38,948 73,500 10.45 10.98 -152
Montréal, QC 24,355,843 127,000 153,516 8.93 8.55 627,008
Ottawa, ON 21,181,500 87,700 416,450 9.10 9.84 -78,742
Regina, SK 720,541 - - 0.41 - -
Toronto, ON 68,333,270 250,000 924,250 8.12 7.47 377,866
Vancouver, BC 27,698,230 20,299 1,712,524 11.13 10.00 309,956
Victoria, BC 3,681,143 80,455 121,000 8.51 9.39 19,167
Waterloo Region, ON 7,112,148 - 154,710 10.76 10.85 -3,876
Winnipeg, MB 3,353,094 - 192,000 12.26 12.26 -
CANADA TOTAL 196,537,295 978,827 4,063,100 9.17 8.95 1,395,442
CANADA | SUBURBAN OFFICE | CLASS A
MARKETEXISTING
INVENTORY (SF) DEC 31, 2012
AVG ANNUAL QUOTED RENT
(CAD PSF) DEC 31, 2012
QUARTERLY CHANGE
IN RENT (%)
ANNUAL CHANGE
IN RENT (%)
VACANCY RATE (%)
SEP. 30, 2012
VACANCY RATE (%)
DEC 31, 2012
ABSORPTION Q4 2012
(SF)
Calgary, AB 11,635,483 44.00 2.3 7.3 7.10 7.63 176,873
Halifax, NS 2,875,036 27.44 - -2.5 10.64 9.84 20,869
Montréal, QC 13,562,834 27.00 - -3.6 7.80 6.66 272,484
Ottawa, ON 12,123,116 30.58 -2.8 -2.2 8.86 9.70 -69,890
Regina, SK 395,432 N/A N/A N/A - - -
Toronto, ON 31,584,389 30.59 -0.1 1.0 9.40 8.87 306,382
Vancouver, BC 13,426,379 33.50 0.4 -6.9 11.13 9.91 179,328
Victoria, BC 770,939 38.00 - -5.0 8.39 13.98 32,512
Waterloo Region, ON 3,422,481 24.15 -0.8 -0.6 10.39 9.99 13,845
CANADA TOTAL* 89,796,089 31.94 0.2 -0.5 9.08 8.72 932,403
*Edmonton and Winnipeg do not track Suburban Class A inventory.
P. 18 | COLLIERS INTERNATIONAL
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
UNITED STATES | OFFICE INVESTMENT
MARKETCBD
SALES PRICE (USD PSF)
CBD CAP RATE
(%)
SUBURBAN SALES PRICE
(USD PSF)
SUBURBAN CAP RATE
(%)
Atlanta, GA 170.00 7.7 125.00 8.3 Baltimore, MD 48.01 131.82 7.5
Boise, ID 84.73 7.4
Boston, MA 246.00 5.5 154.48
Charleston, SC 250.00 8.0 135.00 11.0
Chicago, IL 350.00 6.5 225.00 7.5
Cincinnati, OH 120.00 9.8 137.50 9.5
Columbia, SC 180.00
Columbus, OH 67.40 80.58 8.2
Dallas, TX 150.00 7.0
Denver, CO 144.00 6.5 125.00 7.4
Detroit, MI 75.29 10.3 47.89
Fairfield County, CT 243.00 5.0
Fresno, CA 125.00 9.0 175.00 8.5
Ft. Lauderdale-Broward, FL 175.00 167.00 7.5
Grand Rapids, MI 102.56 8.8
Hartford, CT 95.87 7.8
Houston, TX 200.00 7.3
Indianapolis, IN 165.00 9.0 155.00 8.5
Jacksonville, FL 150.00 8.5
Las Vegas, NV 132.60
Long Island, NY 190.23 7.6
Los Angeles, CA 200.00 8.0
Los Angeles – Inland Empire, CA 191.00 7.0 247.00 6.6
Memphis, TN 32.57 9.0 84.25
Miami-Dade, FL 285.00 6.0 239.00 5.4
Milwaukee, WI 120.00 9.0 100.00 9.5
Minneapolis, MN 121.27 7.3
Nashville, TN 200.00 7.0 120.00 7.0
New Jersey – Central 172.00 7.5
New Jersey – Northern 190.00 7.9
New York, NY – Downtown Manhattan 533.00 5.0
New York, NY – Midtown Manhattan 712.00 5.0
New York, NY – Midtown South Manhattan 400.00 5.2
Oakland, CA 152.47 7.5 111.49 8.5
Orange County, CA 350.00 6.3
Orlando, FL 175.00 8.0 135.00 8.3
Philadelphia, PA 150.00 8.0 159.00 8.0
Phoenix, AZ 65.00 8.0 108.00 7.5
Pittsburgh, PA 130.00 8.0 105.00 8.3
Portland, OR 175.11 8.8 131.62 7.3
Sacramento, CA 151.44 128.97 8.9 San Diego, CA 244.52 6.7 218.44 6.8
HIGHLIGHTS | Q4 2012 | OFFICE | NORTH AMERICA
COLLIERS INTERNATIONAL | P. 19
COLLIERS INTERNATIONAL601 Union Street, Suite 4800Seattle, WA 98101TEL +1 206 695 4200
FOR MORE INFORMATION
K.C. Conway Executive Managing Director, Market Analytics | USATEL + 1 678 458 3477EMAIL [email protected]
James CookDirector of Research | USA TEL +1 602 633 4061 EMAIL [email protected]
CONTRIBUTORS
Jeff Simonson Senior Research Analyst | USA
Jennifer Macatiag Graphic Designer | USA
Cliff Plank National Director | GIS & Mapping
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• $1.8 billion in annual revenue
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Copyright © 2013 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
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UNITED STATES | OFFICE INVESTMENT
MARKETCBD
SALES PRICE (CAD PSF)
CBD CAP RATE
(%)
SUBURBAN SALES PRICE
(CAD PSF)
SUBURBAN CAP RATE
(%)
San Francisco, CA 500.00 5.0
San Francisco Peninsula 250.00 7.0
San Jose/Silicon Valley 280.00 7.0 350.00 6.0
Savannah, GA 150.00 9.5 120.00 9.8
Seattle/Puget Sound, WA 170.22 4.4 367.60 7.4
St. Louis, MO 85.00 9.8 120.00 8.8
Stamford, CT 72.00 8.0
Tampa Bay, FL 115.62 7.4 120.87 9.0
Walnut Creek/Pleasanton, CA 210.00 7.5 180.00 8.0
Washington, DC 575.00 5.6 260.00 6.5
West Palm Beach/Palm Beach County, FL 122.00 188.00 6.4
Westchester County, NY 125.00 8.0
White Plains, NY 72.00 8.0
U.S. AVERAGES* 204.62 7.4 163.49 7.8
CANADA | OFFICE INVESTMENT
Calgary, AB 550.00 5.5 460.00 5.8
Edmonton, AB 354.67 5.8
Montréal, QC 275.00 6.5 190.00 7.3
Ottawa, ON 360.00 6.3 165.00 7.4
Regina, SK 125.00 7.0
Saskatoon, SK 240.00 7.0
Victoria, BC 354.00 6.2 280.00 6.3
Waterloo Region, ON 140.00 7.3 150.00 7.5
CANADA AVERAGES* 299.83 6.4 249.00 6.8
*Straight averages used.
Inventory — Includes all existing multi- or single- tenant leased and owner-occupied office properties greater than or equal to 10,000 square feet (net rentable area). In some larger markets this minimum size threshold may vary up to 50,000 square feet. Does not include medical or government buildings.
Vacancy Rate — Percentage of total inventory physically vacant as of the survey date, including direct vacant and sublease space.
Absorption — Net change in physically occupied space over a given period of time.
New Supply — Includes completed speculative and build-to-suit construction. New supply quoted on a net basis after any demolitions or conversions.
Annual Quoted Rent — Includes all costs associated with occupying a full floor in the mid-rise portion of a Class A building, inclusive of taxes, insurance, maintenance, janitorial and utilities (electricity surcharges added where applicable). All office rents in this report are quoted on an annual, gross per square foot basis. Rent calculations do not include sublease space.
Cap Rate — (Or going-in cap rate) Capitalization rates in this survey are based on multi-tenant institutional grade buildings fully leased at market rents. Cap rates are calculated by dividing net operating income (NOI) by purchase price.
Note: SF = square feet MSF = million square feet PSF = per square foot CBD = central business district
Glossary
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