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Office construction lifts U.S. asking rental rate, but slowing absorption in Q3 raises concerns

Arising tide of new office projects may be skewing the national average rental rate upward and obscuring increased leasing challenges for second-generation properties in many markets, Transwestern’s latest U.S. office market report suggests.

Monthly asking rent averaged $26.97 per square foot in the third quarter, representing a 3.4% increase from a year earlier and a five-year gain of 19.7%. Much of that national increase reflects above-market rents at new or renovated projects, where landlords have incurred elevated material and labor costs to complete amenity-rich offerings.

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