The national leasing market continued to roll in the third quarter according to preliminary data compiled by Newmark Grubb Knight Frank.

• The office vacancy rate ended the third quarter at 15.6%, down from 15.7% in the second quarter and 16.2% in the year-ago quarter. Absorption of 12.1 million square feet bested completions of 3.8 million square feet last quarter. The average asking rent rose to $21.58/sf full service gross, up 1.3% for the quarter and 3.1% over the past year. Credit year-to-date job creation totaling 1.3 million, of which 400,000 are in the office-using sectors of information, financial activities, and professional and business services. Wild card: Hiring activity – and demand for office space – could get a boost early next year post-election assuming Congress acts to mitigate the fiscal cliff.
• The industrial vacancy rate also moved lower, ending the quarter at 8.5% – down from 8.7% in the second quarter and 9.2% in the third quarter of 2011 – helped by solid Q3 absorption totaling nearly 29 million square feet. The average asking rent ended the quarter at $4.67/sf triple net after four consecutive quarters stuck at $4.61/sf. Manufacturers pulled back in the third quarter, and freight shipments have leveled off. But the lack of new construction activity – completions totaled just 5 million square feet for the quarter – helped demand flow through to existing properties. Wild card: Continued turmoil in the eurozone and shaky growth forecasts in emerging markets could restrain demand for distribution centers next year.
• The retail vacancy rate has leveled off at 7.0% for the past three quarters according to CoStar, and the average asking rent has yet to find a bottom. Perhaps more than any other property type, retail is a story of the haves and have-nots. The haves are the fortress malls and anchored centers in strong trade areas, and the have-nots are empty boxes and unanchored strip centers in marginal trade areas. Wild card: The housing market is moving off the bottom, fairly briskly in some markets, which will support retail sales.
• And finally, apartments continue to burn up the track with vacancy falling to 4.6% and the average asking rent rising again by 0.8% to the highest level ever recorded by Reis. This story line has been in place for several years, but it could be changing on two fronts. Wild card: Apartment construction is picking up dramatically in some markets and submarkets, and the for-sale housing market is looking better. The idea of a permanent shift in favor of renting could evaporate as people begin to comprehend that the housing recovery is the real thing this time.