The U.S. office vacancy rate fell to 16.0 percent in the second quarter, the lowest in seven years, research firm Reis Inc said on Monday.

The rate declined by 10 basis points from the first quarter and marked the eighth consecutive quarter of decrease in the national vacancy rate.

Overall net absorption increased by 5.4 million square feet of office space in the second quarter, a significant decline from an increase of about 11.6 million square feet in the preceding quarter, Reis said.

New construction of office space declined to about 6.9 million square feet in the second quarter, from about 7.7 million square feet in the first.

“Labor market has been cooling off a bit in 2016. The next few months will be pivotal for both the labor market and the office space market,” Ryan Severino, the firm’s senior economist and director of research, said in a statement.

New York and Washington D.C. remained the tightest market, with both boasting a vacancy rate of 9.1 percent. The vacancy rate remained unchanged from the first quarter.

Both asking and effective rents increased by 0.6 percent in the latest quarter.

“If both the economy and the labor market stay the course, which is our general expectation, they should create an environment that pushes vacancy down toward 15.7 percent in 2016, while rent growth continues to accelerate toward 3.5 percent on an annual basis,” Severino said.

View original article here by CNBC

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