Tech, Energy Tenants Spur Office Market Rebounds

The U.S. office market is seeing its fifth straight quarterly gain in net occupancy, according to a report from New York-based real estate research firm Reis, Inc. The report credited a demand for space from technology and energy-industry tenants, with the increase in leased space of almost 6 million square feet from January through March. More good news came in the form of a decreased vacancy rate—from 17.6 percent to 17.2 percent—in the first quarter.

While San Francisco leads the country in rent growth, Boston, Seattle, Houston, and San Jose, Calif., accounted for five of the 10 strongest markets for rent growth last quarter, according to Reis. The study shows that cities like these with a large base of technology employers are seeing more of an increase in occupancy and rents than office markets in cities that were overbuilt during the housing boom, including Las Vegas, which remain weak.

Meanwhile, strength in oil and natural-gas demand bolstered the office market in Texas, where Houston—home to energy employers such as BP America and Citgo Petroleum Corp—is quickly bouncing back from a previously slow recovery.