Strong tenant demand in the third quarter of the year caused leasing activity to spike 11.1 percent to a two-year volume high of 62.4 million sq. ft., according to a third quarter 2017 office report from real estate services firm JLL, which attributes the bump largely to new product coming online in supply-constrained markets. Leases larger than 250,000 sq. ft. accounted for 17.5 percent of all leasing activity during the period.
The majority of leasing activity occurred in markets where there is a strong presence of technology companies or knowledge-intensive industries nearing full employment. In fact, a Cushman & Wakefield third quarter office market report noted that 28 percent of all leasing activity in the third quarter occurred in just five of the 87 markets it tracks, including the Silicon Valley, Raleigh/Durham, N.C., Brooklyn, N.Y., Seattle, and San Diego.
JLL researchers report that office rents grew in the third quarter to an average asking rate of $24.81 per sq. ft. Asking rents at class-A buildings rose by about $1 per sq. ft., or 3.3 percent, to roughly $31.00 per sq.