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Cushman & Wakefield: Economic Expansion Continues to Broad

After a slow first quarter, the U.S. economy expanded steadily during the second quarter of 2016, reports Cushman & Wakefield in the latest U.S. Office MarketBeat report. Overall gross domestic product (GDP) growth rose from 1.1 percent to 2.5 percent between the first and second quarter. Job growth was less steady, starting unexpectedly slow in May and then rebounding in June. Despite this volatility, the average monthly job growth in the U.S. remains strong, and healthy growth in office-using employment should translate into continued strong absorption in the office sector.

In fact, 72 of the 87 markets tracked by Cushman & Wakefield recorded positive absorption in the first half of the year. Secondary markets, such as Philadelphia, Phoenix and Miami, in particular, have reported strong positive absorption, indicating that the economic expansion is continuing to broaden and encompass more metro areas. Though the national vacancy rate did not change during the second quarter, it is still down 50 basis points over the past 12 months, and this decline in vacancy over the past few years has driven up asking rents. Asking rents reached a record high of $29.00 per square foot (psf) this past quarter, a 5.8 percent increase from a year ago and the largest increase in the current expansion.

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