(Reuters) - U.S. office vacancy rate was unchanged at 16.6 percent in the third quarter, according to real estate research firm Reis Inc REIS.O.
Overall net absorption, measured in terms of available office space sold in the market during a certain time period, dropped to 3.5 million square feet of office space in the third quarter, compared with 5.5 million square feet, a year earlier.
“The sluggishness in the office market is nothing new, but the deceleration contrasts an otherwise healthy economy as office employment growth has picked up in 2018 from rates seen in 2017,” according to the report.
New construction of office spaces declined to 5.9 million square feet during the third quarter, from 9.7 million square feet, a year earlier.
Both asking and effective rents rose about 2.5 percent.
The recent higher rent growth had suggested that landlords were gaining confidence in leasing conditions, however tenants have been hesitant to take on added space which has kept a lid on rent growth, the report said.
During the third quarter, 41 of the 79 metros reported a rise in vacancy, while New York City once again had the lowest vacancy rate among the metros.
Reporting by Sanjana Shivdas in Bengaluru; Editing by Shounak Dasgupta