US Office Market Still On The Downtrend In Q1
USA – Data from various property consultancies show that office leasing volume across the country continued to fall during the first quarter of the year, reported The Business Journals on Monday evening (15 May, SGT).
In Q1 2023, total office rental volume dropped to 38.5 million sq ft. Apart from representing the third straight quarter of decline, it was also 9.8 percent lower than the figure recorded in Q4 2022, based on data from Jones Lang Lasalle (JLL). Moreover, office leasing volume contracted by 10.7 percent quarter-on-quarter during the period under review.
JLL disclosed that the banking and financial industry was the top office space lessor, dethroning the tech sector during the first three months of the year. Notably, office rental activity by the tech sector plunged by 53.3 percent between 2019 and Q1 2023.
Similarly, figures from CBRE showed that office leasing volume across the United States fell 25 percent quarter-on-quarter during the period under review, while Cushman & Wakefield (C&W) revealed that overall office rental volume in the country contracted by 23 percent from Q4 2020, hitting levels seen during the height of the pandemic.
Moreover, the national office vacancy level is on the uptrend. As per CBRE, C&W, and JLL’s respective gauges, it hit 17.8 percent, 18.6 percent, and 20.2 percent.
Office absorption in Q1 2023 also reached -16.5 million sq ft – the lowest figure in two years, noted CBRE.
Merely 15 of the 55 markets monitored by CBRE registered positive net office absorption. In particular, places like Los Angeles, San Francisco, and Boston witnessed declines, while Sun Belt markets such as Miami and Nashville, Tennessee saw positive gains.
Also, CBRE shared that the amount of subleased office space across the US rose by another 12.4 million sq ft during the first three months of the year, hitting a record high of 189 million sq ft. Consequently, subleased office space accounted for 19 percent of the overall available office space at the end of Q1 2023, up from just 13 percent during the first quarter of 2020.
Furthermore, developers started building merely 2.3 million sq ft of office space during the period under review. Also, only half of the office properties under construction at the end of Q1 2023 were pre-let, added JLL.