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Q1 2022 | U.S. Office Market Outlook - THE TENANT ADVISOR

Q1 2022 | U.S. Office Market Outlook - THE TENANT ADVISOR

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    Q1 2022 | U.S. Office Market Outlook

    by CoyDavidson | May 25, 2022

    The U.S. Office Market Hits Pause in the First Quarter

    The U.S. office market is at a critical juncture. Following close to two years of pandemic-driven correction, signs of stabilization emerged in the second half of 2021, with positive net absorption for two successive quarters.

    However, the market took a pause in Q1 2022. Absorption was slightly negative at -534,000 square feet, while vacancy ticked up by 20 basis points to 15%. These modest changes are not seen as indicative of a downturn in the market. Stabilization is set to continue as more employees return to the office in the second and third quarters.

    Key Takeaways

  • The U.S. office vacancy rate increased slightly in Q1 2022.
  • Net absorption was marginally negative following two consecutive quarters of occupancy gains.
  • Asking rents are mostly holding firm, but generous concessions are on offer.
  • Sublease space levels ticked up in the first quarter and remain elevated.
  • Supply-side risks are limited with speculative construction subdued.
  • Office occupancy is increasing with more firms returning to the office in some capacity.
  • Sales volume has increased considerably year-over-year.
  • Despite the recent economic slowdown, office-based jobs are being added at a healthy rate.
  • Sun Belt cities, particularly in Florida, and mid-tier tech markets are set to lead the office recovery.

    • ▸ Click here to download the full report as a PDF.

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