ASKING rents for United States offices have risen 1.1 percent in the second quarter from the previous three months, the smallest gain in almost three years, according to research firm Reis Inc.
Job losses and a slowing economy were blamed.
The effective rent, or the amount tenants actually pay property owners, rose 0.7 percent, the third straight quarter it lagged behind asking rents, a sign landlords are offering concessions to tenants, Reis said in a survey yesterday obtained by Bloomberg News.
The annualized increase was 4.3 percent for asking rents and 2.9 percent for effective rents. The national vacancy rate rose 0.2 percentage point to 13 percent.
"Behind the slowing rent trajectory, demand for office space has weakened dramatically," said Sam Chandan, chief economist for Reis. Sublease space was increasing and potential tenants were delaying lease commitments.
US companies cut almost 80,000 jobs in June, according to a private survey estimate by ADP Employer Services, and financial firms have announced plans to cut 90,000 jobs.
Declines in the mortgage industry, housing, manufacturing and auto production are pushing down office rents and occupancy, Reis said.
Effective rents in New York, the largest US office market, increased 0.7 percent to an average of US$58.49 a square foot, less than expected by investors who bought buildings last year, Reis said.
Seattle had the highest effective rent gain, 2.8 percent to an average of US$27.46 a square foot. Philadelphia and Houston each rose 2.7 percentto US$20.38 and US$20.42. San Francisco gained 2.6 percent to US$36.13 and Boston 1.8 percent to US$33.89.
Washington, Fort Worth, Texas, Los Angeles, Miami and Pittsburgh also ranked among the 10 metro areas with the highest effective rent growth, Reis said.