US Office Vacancy Rises Higher In Q3 2022
USA – The latest data from Colliers’ showed that while asking office rents mostly held firm, office vacancy level across the country climbed at a higher pace during the 3rd quarter, reported GlobeSt on Wednesday evening (23 November, SGT).
According to the real estate consultancy, the overall office vacancy in the United States increased to 15.4 percent, up from 15.1 percent during the previous quarter and 14.9 percent during the same period a year ago.
Nonetheless, the overall office vacancy level is still lower than the record-high of 16.3 percent witnessed during the 2008 Global Financial Crisis.
Another positive news is that net office absorption was positive across 52 percent of the office markets tracked in Colliers’ survey. Notably, net absorption refers to the amount of office space that became physically occupied minus those that became vacant during the period.
However, “it will likely take another 18 to 24 months for economic and business concerns to play out,” stated Colliers, adding that office tenants are presently reassessing their work practices and office space requirements.
In October, GlobeSt reported that businesses were starting to be “more confident with how they will operate going forward,” said Jason Wurtz, Executive Vice President for office services at property brokerage NAI Hiffman.
“The clock is ticking, and short-term decisions can only be extended for so long.”
“As more companies right-size, we will see activity in the market as companies decrease or increase their space, although it will be some time before we see positive net absorption.”
Meanwhile, the latest figures from Colliers showed that the amount of subleased office space remains at record levels.
“As firms continue to evaluate their post-COVID real estate needs, sublease space will remain a cost-competitive, short-term option until there is greater clarity on business direction,” Wurtz explained.
Meanwhile, data from Colliers revealed that office building activity in the US continues to become more sluggish. As of the 3rd quarter, 104 million sq ft of office space were under construction compared to the cycle’s peak of 164 million sq ft during Q3 2020.