Against a global backdrop of diminishing business confidence and a weaker outlook for economic growth, a robust labour market in the world’s largest economies continues to underpin demand for office space with high employment levels prevalent across a number of major markets. Demand continues to be driven by the knowledge economy, with the coworking boom continuing to broaden its reach across major markets, forcing traditional landlords to adapt their offering in order to best accommodate existing and potential occupiers.
These are some of the key trends noted in Avison Young’s Mid-Year 2019 Global Office Market Report, released today. The report covers 79 office and coworking markets in eight countries across the globe: Canada, the United States, Mexico, the United Kingdom, Germany, Poland, Romania and South Korea.
“Despite increasing headwinds and political uncertainty, the relative health of the economy and labour markets continues to provide a positive foundation for office space demand across major global markets,” comments Mark E. Rose, Chair and CEO of Avison Young. “We continue to see significant development in urban areas of major metropolitan markets across all countries in which we operate. The impact can be seen on city skylines, which are changing rapidly, and in the delivery of new forms of workspace driven by organizations that are constantly adapting to their changing workforces and new technologies.”
Rose continues: “The large development pipeline is being more than offset by robust demand. This situation is particularly true for good-quality class A space with preleasing levels at historic highs.”
According to the report, of the 79 office markets surveyed by Avison Young in North America, Europe and Asia, which comprised 7.5 billion square feet (bsf), market-wide vacancy rates declined or remained flat in almost two-thirds of the markets as more than 126 million square feet (msf) was absorbed on an annualized basis – up 12 percent compared with the prior 12-month period.
The report goes on to say that construction cranes remained prominent fixtures across many skylines as nearly 84 msf of office space including coworking space was completed during the 12-month period, while another 253 msf was under construction at mid-year 2019 (40 percent preleased) – up 16 percent year-over-year.