June 30 U.S. office vacancy rate remained stagnant at 16.8 percent in the second quarter due to lower demand for new or additional space, real estate research firm Reis Inc said in a report released on Monday.
Although job growth is accelerating, it is likely that newly created office jobs are taking up under-utilized space and not yet creating much demand for leasing of new or additional space, Reis said.
The research firm, however, said it expected the recovery in the office space market to spread beyond the technology and energy sectors and cover more U.S. metros going forward.
"If stronger labor-market gains persist, the recovery in the office market should become more pervasive, across an increasing number of metro areas," Ryan Severino, senior economist and associate director of research at Reis, said in the report.
Nearly 3.88 million square feet of new office space came into the market in the second quarter, and 2.76 million square feet was newly occupied. This was the first time supply outpaced occupancy, Reis said.
Rent growth continued to be driven by areas with significant technology or energy presence, Reis said.
Markets in Houston, San Jose, San Francisco, Dallas, New York, San Diego and Orange County had the strongest rent growth in the quarter, Reis said.
The vacancy rate in other markets needs to tighten further before rents there rise, Reis said.
Washington, D.C. remained the tightest office market in the United States, reporting the lowest vacancy rate of 9.6 percent, with New York following at 10 percent. (Reporting by Mridhula Raghavan in Bangalore; Editing by Kirti Pandey)