U.S. Office Market Starts to Cool: Pressure Mounting from COVID-19

by | 08 June 2020

Colliers’ latest research report — The Q1 2020 Office Market Outlook Report — highlights the office market’s response to the COVID-19 pandemic. The U.S. office market showed its first signs of cooling in the first quarter of 2020. Net absorption fell sharply but remained slightly positive, while there was a marginal increase in vacancy, which was coming off a record low. Construction levels fell but remain elevated while rents, for the most part, held firm. Although sales volume was down, capitalization rates (cap rates) and pricing held steady.

Featured Highlights

  • Vacancy remains tight: U.S. office vacancy rose slightly in Q1 2020 but remains low by historic standards.
  • Slight increase in rents: Average asking rents increased marginally in the first quarter with the greatest appreciation taking place in the suburbs.
  • Absorption falls: Net absorption fell in Q1 2020, with suburban markets registering the bulk of any increases.
  • Construction slows slightly: Office construction fell in the first quarter but remains elevated.
  • Sales volume falls: Office sales volume is down year over year. Investors continue to favor the suburbs.

For more details on the latest office trends, download the Q1 2020 U.S. Office Market Outlook.