services. The industrial sector rose jumped 13. 3 points
to a value of 99.2, boosted by strong demand for ware-
houses. Both sectors continued their advance towards
a balanced market, signaled by an index value of 100.
As macroeconomic conditions provide a favorable
foundation for commercial markets, leasing and sales
activity accelerated during the second quarter. A major-
ity of SIOR members found leasing to have returned to
or exceeded long-term averages, with 89 percent report-
ing steady or rising rents. At the same time, 71 percent
of respondents reported declining vacancies for office
and industrial properties. Concessions also declined,
with 53 percent of SIORs finding moderate to deep dis-
counts on rent, a noticeable drop from last quarter’s 68
percent. Subleasing availability also declined, with only
11 percent of SIORs reporting ample sublease space.
Construction of new office and industrial spaces
posted a rebound in the second quarter, as 12 per-
cent of respondents reported rising new construction.
Development conditions mirrored an improving land-
scape—it was a buyer’s market for only 48 percent of
SIOR members, compared with 61 percent last quar-
ter. Acquisition prices remain soft, however—they
were lower than construction costs in 68 percent of the
markets. The national economy’s improvement, led
to a rise in local economic conditions—one in three
SIORs reported negative impacts at the local level from
national trends, down from 81 percent in the second
quarter of 2012.
The gain in fundamentals was spread across all
geographic regions. The South retained its top spot in
absolute index values, closing at 104.1—a value which
clearly indicates market growth. The Midwest posted
the strongest gains in quarterly growth, rising 23. 3
points to an index value of 95.3. The West rose 12. 7
points while the Northeast increased 9. 5 points.
Looking ahead, SIOR members expect conditions to
remain positive and improve as we move into the latter
half of 2013—80 percent of respondents anticipate bet-
ter markets in the next three months.