U.S. Office Absorption Hits a New Low as Sublease Space Rises Sharply
Our latest report dives into key factors that are currently impacting the U.S. office market. We discuss vacancy rates, absorption, rents, construction, and the investment market, among others. We also explore trends in downtown and suburban markets throughout the U.S.
U.S. office absorption fell significantly in Q3 2020 as the effects of COVID-19 placed an even greater toll on the market than in the preceding quarter. Concurrently, the vacancy rate posted its greatest quarterly increase in more than 10 years as leasing activity remained subdued and the amount of sublease space on the market rose sharply. Construction levels remain elevated and, while there was a slight increase in sales volume in the third quarter, most investors remain on the sidelines.
As tenants continue to assess their future space needs, the amount of sublease space on the market is set to continue to rise. On the positive side for tenants that are active in the market, there is an opportunity to lease high quality, well fit-out space at a point in time when lease terms are becoming increasingly negotiable.