Office Vacancies Show First Post-Pandemic Decline, Says CBRE
According to CBRE’s Stefan Weiss, average asking office rents, even after adjusting for inflation, remain at their lowest since the late 1980s. Despite a healthier vacancy rate, it still exceeds the typical long-term average of 12% to 14%.
Weiss highlighted that the office market slump caused by the pandemic-driven rise of remote and hybrid work is starting to improve. This shift is beginning to influence rents.
Rents and Demand Trends
- Office asking rents, excluding concessions, increased 1.7% year-over-year to $32.47 per square foot annually in Q3, up from $31.92.
- On an inflation-adjusted basis, average rents are at their lowest since about 1988.
- Most corporate costs are rising faster than rent increases, maintaining a market skewed in favor of tenants outside of premium buildings.
«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,» Weiss said in an interview.
Signs of Stabilizing Demand
Demand appears to be stabilizing, partly driven by return-to-office initiatives and increased space needs from financial services and technology firms.
Two years ago, space allocated per office worker reached a low of 146 square feet but has since grown slightly to 149 square feet, Weiss noted.
Summary: The office market is showing early signs of recovery with declining vacancies and modest rent growth, though tenants still hold significant leverage outside premier properties.