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Office space grows during second quarter of 2013

July 3, 2013

Many small businesses may be benefiting from a number of positive market conditions in recent months, and this could be manifested in office sector growth this year.

Many small businesses may be benefiting from a number of positive market conditions in recent months, and this could be manifested in office sector growth this year.

Overall office space demand rose during the second quarter, as there was more than 15 million square feet of space absorbed, according to a report from Cassidy Turley. This was markedly improved from the first quarter’s level, which reached 5 million square feet.

The vacancy rate for office properties managed to decline to 15.3 percent, the report noted – 10 basis points lower than during the first quarter and nearly 2 percent lower than the peak during the recession, which was 17.2 percent. Overall, the firm noted the period was one of the best-performing quarters since the recovery began.

“It is interesting to observe that tenants are consistently gravitating to newer buildings, and yet, that segment remains supply constrained,” said Kevin Thorpe, chief economist at Cassidy Turley. “New development remains 30 percent below the norm. So this one sliver of the market, new space, is entering into a tight supply/strong demand scenario. Rents could very well soar for the new office space that delivers to the market over the next 12-24 months.”

Perhaps not-so-coincidentally, in addition to a tightened office inventory, there was also a heightened level of confidence coming from some business leaders in recent months. A report from ManpowerGroup noted that more than 20 percent of business executives want to hire more workers during the third quarter, while another 70 percent don’t plan on laying off workers.

Companies that have an improved level of office space may be growing and looking at other ways to improve their organization. One of these may be to consider a wide array of merchant services that are available to them.

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