Q1 2022 U.S. office market overview
Inventory
With the addition of roughly 60 MSF to existing supply over the last 12 months, tech heavy markets and Sunbelt markets have been the largest drivers of new deliveries. As well, both tech and Sunbelt markets are leading current construction underway.
Net absorption
With leasing activity continuing its positive trend, net absorption as a percentage of inventory turns positive. While the office market is showing signs of recovery, leasing fundamentals have yet to recover to pre-pandemic levels. Sublet space has begun to decline, yet still hovers close to an all time high.
Direct asking rent
Asking rates - which bottomed in early 2021 - have been on a steady albeit only slight increase. Given this dynamic, year over year rates have remained almost flat. Until sublease space begins to appreciably decline, direct rents will be slow to return to pre-pandemic rates.
Availabilities
Sublet space, although now beginning to decline slightly over the past few quarters, is still weighing heavy on fundamentals. Sublet space remains near an all time high yet is also attracting tenants seeking better terms for shorter periods. This dynamic is creating more flexible opportunities for tenants.
Vacancy
Vacancy remained relatively flat when compared to year end 2021 yet has been on a steady increase since the start of the pandemic. As supply continues to comes online, large blocks of space remain unfilled, and sublease space remain abundant – vacancy is predicted to remain elevated.
Investment sales
Office investment sales volume picked up dramatically in the second half of 2021 and through Q1 2022, despite ongoing uncertainties related to return to office. As inflation remains high, commercial real estate is well positioned to attract continued investment as investors hedge risk.
Local 2022 Q1 office market reports
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- Atlanta
- Austin
- Boston
- Charleston
- Charlotte NC
- Chicago (Downtown)
- Chicago (Suburban)
- Dallas
- Denver
- Detroit
- Fairfield-Westchester
- Fort Lauderdale
- Greenville
- Houston
- Indianapolis
- Jacksonville
- Las Vegas
- Long Island
- Los Angeles
- Miami
- Minneapolis
- Nashville
- New Jersey
- Manhattan
- Oakland
- Orange County
- Orlando
- Philadelphia
- Phoenix
- Pittsburgh
- Raleigh-Durham
- Sacramento
- San Francisco
- San Jose Silicon Valley
- Tampa
- Washington DC (Northern Virginia)
- Washington DC (Downtown)
- Washington DC (Suburban Maryland)
- West Palm Beach
Additional thought capital from Avison Young
U.S. employment overview: tracking trends in real-time
The U.S. economy continues to outpace job projections and is showing growth across many sectors. However, job openings, inflation, and efforts to stem it are areas of concern heading further into 2022.
May 2022 jobs numbers continued to beat consensus projections, with the economy adding 390,000 jobs compared to the 328,000 projected by economists. However, this is the first time in many months that job adds have dipped below 400,000. The top two sectors were Leisure and Hospitality and Professional and Business Services, which added 84,000 and 75,000 new jobs, respectively. Across major metropolitan areas, more than half now have more jobs than they did pre-pandemic.
Office Vitality Index
The Vitality Index offers owners and occupiers a dynamic look at recovery trends and daily foot traffic estimates in 20+ different metros across North America. It allows easy, real-time access to comparisons to pre-pandemic levels.
