(Reuters) – The U.S. office vacancy rate rose marginally to 16.8% in the fourth quarter from a year earlier, according to real estate research firm Reis Inc.
Of the 79 metropolitan areas covered by Reis, 24 showed an increase in vacancies in the quarter.
“Office occupancy growth was much stronger in the fourth quarter; however, three metros saw the lion’s share of the growth: Chicago, New York and Dallas,” according to the report.
New construction of office spaces fell to 12.5 million square feet from 14.7 million square feet a year earlier.
The research firm, however, flagged concerns about office-space sharing company WeWork’s occupancies as the company over-expanded and may need to reconsider some of its office leases, which could raise vacancies in a few metros.
WeWork’s woes and escalating geopolitical tensions following the U.S. strike in the Middle East could hurt the office market, Reis said.
Iran promised vengeance after a U.S. air strike in Baghdad on Friday killed Qassem Soleimani, Tehran’s most prominent military commander and the architect of its growing influence in the Middle East.
Reis said net absorption, measured in terms of available office space sold in the market during a certain time period, rose 21% to 12.2 million square feet of office space in the quarter.
The average asking and effective rents rose 2.6% and 2.7%, respectively, from a year earlier.
“Job growth should stay positive in 2020 and continue to support occupancy growth in the office sector at a similarly tepid pace as in 2019,” Reis said.
(Reporting by Sanjana Shivdas in Bengaluru; Editing by Aditya Soni)