Technology-heavy markets are playing a major role in the slow, but steady recovery of the U.S. office market. Vacancy rates dropped to 16.6% in the first quarter of 2015, down from 16.7% in the previous quarter. Additionally, rents also increased to $30.21 a square foot, up 0.9% from their 2010 mark. Experts agree that although there is still room for improvement, the U.S. office market is relatively healthy.
Leading the pack in the recovery are markets packed with growing technology companies. San Jose, CA leads the country in rent growth over the past year with a 7.2% increase from last year’s rents. Seattle and San Francisco are not far behind with rent growths over the past year of 6.4% and 5.9% respectively. Large technology companies such as Facebook, Amazon, and Uber are hiring new employees at a rapid rate and are requiring additional office space as a result. This growth is not expected to slow down anytime soon.
Meanwhile, as technology-heavy markets thrive, markets dependent on oil are struggling in the office sector. Houston, which currently houses one-sixth of the office space under construction in the U.S., has seen a growing trend in office subleasing. 6.3 million square feet of sublease space was available at the end of the first quarter, this number is up from 4.8 million at the end of 2014.