Soft Office Market Fundamentals Persist

Executive Summary

• Negative net absorption was reduced by more than half quarter-over-quarter in Q3 to 4.0 million sq. ft., as hybrid working arrangements and economic uncertainty continued to lessen demand for office space.
• Negative net absorption and the completion of 8.6 million sq. ft. of new supply pushed the overall office vacancy rate up by 20 basis points (bps) quarter-over-quarter to 18.4%.
• Average asking rent remained relatively flat year-over-year at $35.45 per sq. ft. but fell slightly from Q2, the first quarterly decrease since Q2 2021. Taking rents dropped for the second consecutive quarter to $31.92 per sq. ft., further indicating tenant-favorable market conditions.