- Consistent stabilization of demand over the past two years has driven the first decline in vacancy since early 2019.
- With footprints beginning to expand and little new development, office could be entering an extended period of declining vacancy rates.
- Gross leasing volume grew 6.5% QoQ to 52.4 million s.f., just 400,000 s.f. under a post-pandemic record volume.
- 18 markets are exceeding pre-pandemic leasing activity over the past year, and an additional seven markets have returned to over 90% of pre-pandemic levels.
- Less than 6 million s.f. is available in the construction pipeline – down from over 50 million s.f. in 2019.
- Class A stock built since 2000 has seen vacancy decline by 104 basis points over the past 12 months, tightening in advance of the broader market.
- The active construction pipeline has fallen by an additional 20% in Q3 – on average major office markets have less than 500,000 s.f. under construction.
- Some speculative trophy products are being proposed in high-cost gateway markets but are doing little to offset broader declines in new development activity.
- Office attendance hit a fresh post-pandemic high in July, with foot traffic reaching 80% of pre-pandemic levels.
- Office mandates that were issued in Q3 effected roughly 250,000 workers; other companies are likely to follow suit in the coming months.