Our latest research report — The Q1 2020 Top Office Markets Snapshot — presents the key trends and statistics for the top 10 office markets in the U.S.
- The leading office markets in the U.S. showed signs of cooling in the first quarter of 2020. While rents are mostly holding firm or were showing modest increases (prior to COVID-19), the share of markets with rising vacancy and lower absorption has now increased.
- Although mostly marginal, absorption was negative in four markets and fell in two more. Similarly, six of the 10 markets saw their vacancy rate rise in the first quarter.
- All but one of the top 10 markets posted positive absorption in the fourth quarter with levels rising in five. Where negative absorption did occur, it was marginal and not indicative of any weakening.
- Leasing activity began to slow in March as the magnitude of the COVID-19 pandemic began to make itself known. COVID-19 has created a climate of uncertainty and we expect that decision making will largely be put on hold while businesses reevaluate their real estate needs and seek to contain costs.
- All markets will be impacted by the pandemic, but tech-led markets with established firms with strong balance sheets, such as Silicon Valley and Seattle, could hold up the best. Boston’s leading role in life sciences is also a plus. At the other end of the spectrum, Houston faces considerable challenges in the face of the collapse in oil prices. Similarly, Los Angeles is being affected by COVID-19’s impact on the entertainment sector which has caused production to close.
- Demand from coworking and flexible workspace firms, which had been a key driver of leasing volume across most of the leading markets, has all but dried up.
For more details on the latest office trends in these top metro markets, download the Q1 2020 U.S. Top Office Metros Snapshot and look for our full Q1 2020 U.S. Office Report coming soon.