Daily Real Estate News  |  October 4, 2007  |   Office Rent Growth Slows in 3rd Quarter
The growth of commercial rents slowed in the third quarter, according to a survey of 79 of the top U.S. office markets by Reis Inc, a commercial real estate research firm.

Rents continued to be healthy in the third quarter, rising 2.4 percent to an average $24.17 per square foot. But the percentage increase was lower than what was recorded during the first six months of the year, when rents grew by a solid 3 percent per quarter.

Nationwide, the office market has benefited from a slowdown in new construction. New office buildings brought 12.2 million square feet of space onto the market in the third quarter, about average for the last year but well below the peak in 2001, when 47.1 million square feet opened in the fourth quarter.

"There is a slowdown," says Barry M. Gosin, chief executive of Newmark Knight Frank, a commercial real-estate services firm. "Any major financial institution is not in a hurry to rent space right at the moment."

There are exceptions, experts note. Texas office markets are hot with Austin leading the nation in rent growth at 5.6 percent.

But even in Austin there's been a slight pullback. "We're starting to see short-term renewals and people not have the confidence to step up and buy into the current environment," John Childers, a Austin-based broker with the Staubach Co., a tenant representation firm.

Source: The Wall Street Journal, Ryan Chittum (10/04/2007)