Transwestern Examines Mass Transit’s Influence On Office Market In Major Metros

The national average rent in transit-accessible office buildings was 65 percent higher than the average market rent in early 2018, Transwestern reports in a new analysis of mass transit’s influence on the office market. The examination of 15 major metros shows average rent in Central Business Districts was $43.48 per square foot NNN for transit-accessible buildings versus $26.01 per square foot NNN for car-dependent buildings. Transit-accessible office space was also at a premium in the suburbs, with average rent of $33.43 per square foot NNN being nearly 50 percent higher than rent in car-dependent buildings.

“As workplace amenities have become increasingly important to companies in attracting and retaining talent, tenants are most certainly keeping accessibility to mass transit on their radar when surveying office product,” said Brian Landes, Director of GIS/Location Intelligence for Transwestern. “Not surprisingly, vacancy for transit-accessible buildings is lower than overall vacancy, which makes these buildings extremely attractive to commercial real estate investors.”
In the analysis, transit-accessible buildings are defined as those within a 10-minute walk from a subway, commuter rail or light rail facility. Based on the combined statistical areas in the set (Atlanta, Boston, Chicago, Dallas, Denver, Houston, Los Angeles, Miami, Minneapolis, New York/New Jersey, Phoenix, San Francisco, Seattle, St. Louis and Washington, D.C.), approximately 39 percent of total office inventory is categorized as transit-accessible, while the remainder is car-dependent.

The Washington metro’s percentage of transit-accessible office inventory is above the national average, coming in at 49 percent, or 248 million square feet. The average rent for these buildings was $38.56 per square foot NNN at the end of the first quarter.
“Of the buildings constructed in the Washington metro since 2013, 50 percent are located within a 10-minute walk to a transit station, up from 26 percent of buildings constructed between 2008 and 2012,” said Elizabeth Norton, Managing Research Director for the Mid-Atlantic region. “And while this is weighted more to the District of Columbia where most buildings are located near transit, the suburbs have seen a significant uptick. Since 2013, 29 percent of suburban buildings have been constructed near transit versus only 13 percent during the previous five years.”

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