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The office sector is slowly recovering after taking a major hit during the COVID-19 pandemic. Life science industries are helping to lead the increase in interest.
Across the top 50 U.S. markets, average office lease rates are up 1.1% over year-ago levels, according to the latest CommercialEdge report, which covers properties that are at least 50,000 square feet. “The sustained growth in asking rates nationally was supported, in part, by markets with an abundance of high-quality office space coming online, as well as concession strategies in lieu of price adjustments,” the CommercialEdge report says. “What’s more, the current increased appeal of properties compatible with life science tenants gravitates toward established R&D office clusters.”
Boston has seen the highest rent growth in the office sector, posting a 7.6% year-over-year increase in average lease rates. Los Angeles and the San Francisco Bay Area followed, with lease rates up 7.2% and 4.9%, respectively.
The office market continues to expand, with demand increasing for bioscience research offices and lab space and in several markets. About 161 million square feet of office space is currently under construction in the top 50 markets, with projects covering 85 million square feet scheduled to be completed this year, according to the ComercialEdge report.