In this article, we examine the current context of the U.S. office market and highlight the key performance indicators in the first quarter of 2020.

The U.S. office market posted a subdued first quarter. There was a slight increase in vacancy, while absorption fell, and rents posted marginal gains. Construction fell slightly but remains elevated. Suburban markets continue to see the greatest share of capital being placed.

Looking ahead, the COVID-19 pandemic has created a climate of uncertainty. Decision making will largely be put on hold, impacting both leasing and acquisition/disposition activity.

A clearer picture will emerge as we move through the second quarter, which will be the initial quarter to be fully impacted by the pandemic. A key factor will be the extent to which business confidence returns in the second half of 2020 and whether this will be in the context of a new pricing climate — both in terms of rents and capital values.

Vacancy Increases Marginally

Rents Inch Upwards

Absorption Falls but Stays Positive

Construction Remains Elevated

Suburban Markets Lead Sales Activity

For more insights, stay tuned for our Q1 2020 Top Office Markets Report and our full Q1 2020 Office Market Outlook Report, both to be published soon.

About the Author:

Stephen is the National Director of Office Research for Colliers International, where he focuses on analyzing office property trends, compiling Colliers’ thought leadership and delivering timely market projections to provide clients with a leading edge in our industry.