Office Vacancies Show First Annual Post-Pandemic Decline: CBRE
According to CBRE’s Stefan Weiss, average asking office rents, adjusted for inflation, remain at their lowest levels since the late 1980s despite rising trends. The vacancy rate has improved but still exceeds the historical average of 12% to 14%, signaling a potential recovery in the office market following the pandemic-driven remote and hybrid work surge.
Rents and Vacancy Trends
Office rental rates excluding concessions increased by 1.7% year-over-year, reaching $32.47 per square foot annually in Q3, up from $31.92, Weiss explained. However, when adjusted for inflation, asking rents remain near their lowest point since 1988.
Market Dynamics and Tenant Advantage
Weiss pointed out that while corporate costs rise faster than rent increases, the market still heavily favors tenants, especially outside prime office spaces. He remarked,
“Users of prime space are seeing the market is tighter but it’s still a tenant-favorable market for anything outside of that prime product.”
Signs of Stabilizing Demand
Demand appears to be stabilizing, partly driven by the return-to-office initiatives and increased requirements from financial services and technology sectors for larger office spaces. Corporate space per office employee, which hit a low of 146 square feet two years ago, has slightly risen to 149 square feet.
Summary: Office market conditions show early recovery after the pandemic slump, with rents rising modestly and tenants continuing to benefit, particularly outside prime locations.
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