Office Vacancies and Rental Trends Post-Pandemic
Despite an increase, the average asking office rents, adjusted for inflation, remain at their lowest level since the late 1980s, according to CBRE’s Stefan Weiss.
The healthier vacancy rate, although still above the long-term average of 12-14%, indicates the office market is beginning to recover after a slump triggered by increased remote and hybrid work during the pandemic.
Rents and Vacancy Rate Insights
- Office taking rent, which excludes concessions, grew by 1.7% year-over-year to $32.47 per square foot in Q3, up from $31.92.
- Inflation-adjusted asking rents are the lowest since approximately 1988.
Market Conditions and Tenant Favorability
Most corporate expenses increase faster than rents, supporting a market that favors tenants outside prime office spaces, as Weiss noted:
“The market is tighter for prime spaces, but outside that, it remains tenant-friendly,”
Demand Stabilization and Space Utilization
Demand appears to be stabilizing, driven by return-to-office initiatives, with financial and tech sectors boosting the need for larger spaces. The average space per employee has increased from 146 to 149 square feet over two years.
Author’s summary: The post-pandemic office market is showing signs of recovery with rising rents and stabilizing demand, although vacancies remain higher than historical averages.