The Near-Term Outlook for Commercial Real Estate

U.S. office vacancy rates dropped in 2014 and expected to continue this trend in 2015. Downtown and suburban markets in Denver, Houston and San Francisco are the tightest markets and building owners are seeing the lowest vacancy and increasing rents. Markets such as Washington, D.C, and Chicago are more challenging for owners and favorable for tenants. New construction in most markets was subdued in 2014, and is expected to be low overall in 2015. Overall this should result in continued rent growth and lower vacancy. Tech companies are still leading the markets in leasing activity. Business services, creative industries and financial services have also been very active.