Challenges Persist for U.S. Office Demand

Executive Summary

• Negative net absorption increased to 13 million sq. ft. in Q1 after three consecutive quarters of decline.
• While most of the 57 U.S. markets tracked by CBRE had negative net absorption in Q1, several maintained positive net absorption streaks, including Nashville, Miami and San Jose.
• Negative net absorption was concentrated in older, commodity buildings, while offices constructed since 2010 had positive demand. The vacancy rate for newer buildings remained below the overall U.S. average at 15.6%.
• Space under construction slowed in Q1 to less than half of its pre-pandemic quarterly totals.
• Average asking rents remained relatively unchanged, but taking rents decreased slightly. The larger gap between the two rates indicates that tenants have more negotiating power in lease agreements.