The first quarter of 2013 has been filled with indicators of a recovering, growing economy – with the stock indexes reaching new highs, and employment numbers seeing continued growth, particularly in the New York City area. The demand and asking rent for office space in New York City, as well as other major cities such as San Francisco, Houston and San Jose; is up in the first quarter of 2013, as a result of increased hiring and growth among small businesses.
A recent report by Yahoo News! explained that the office vacancy rate fell only slightly during the first quarter of 2013 nationwide, but growth in areas that are concentrated with technical services such as San Francisco and New York saw a much more pronounced decrease in vacancies, as well as pronounced increase in the average rent for office space.
Nationwide, the average effective rent grew at a rate of only 0.7% to $28.66 per square foot – but follows a quarter of 0.8% and has not declined in several months, a positive economic indicator. While still below 2008 highs before the recession, the slow but steady growth is a sign that the economy is still moving forward.
Phoenix, Las Vegas and Detriot – some of the cities impacted hardest by the recession and housing bubble collapse – have seen extremely high office space vacancy, a troubling sign for the local economy. San Francisco and New York – both of which have become the leading home for companies providing technical services such as software development, internet marketing, social networking and website design – have seen a constantly declining vacancy rate over the same period.
While growth in demand for office space may seem lackluster, it’s important to note that many companies choose to use virtual offices in New York City, San Francisco and other locations – using an office space part-time while still maintaining their business presence. Hiring is also seen by economic analysts as a lagging indicator of economic recovery – the hiring follows a few weeks or months after a strong economic surge, and a pronounced increase in hiring should be within the coming months.