Q1 2023 U.S. office market overview

Leasing activity took a step back in early 2023, dipping to -42.2% of pre-COVID and -27.5% of post-COVID levels, as banking failures, liquidity concerns and economic headwinds took center stage. Still, high-quality offices—such as those that offer superior sustainability—have continued to outperform the broader market. Demand is poised to rise, but is unlikely to meet pre-pandemic levels, as return-to-office efforts come to fruition, space utilization strategies get realized and tenant-favorable market conditions predominantly persist.
-42.2%

Q1 2023 leasing activity vs. 2001-Q1 2020 quarterly leasing activity

Mounting financial services disruption, highlighted by the collapse of Silicon Valley Bank and several banking acquisitions, contributed to the second-weakest quarter in terms of leasing activity since 2001. Leasing activity is poised to rise as 2023 progresses—but is still unexpected to approach pre-COVID levels—as tenants capitalize on greater leverage and space utilization strategies come to realization.

+28.4%

Post-COVID Trophy net effective rents in Manhattan

Tenants seeking new construction and other high-quality assets in select gateway markets need to execute or risk being boxed out by other requirements.
$36.3B

Potential at-risk office loans maturing by 2025

Continued office foreclosures, particularly properties encumbered by fixed-rate loans originated before 2021, are expected in the near term, including dispositions by institutional landlords with assets in gateway markets, as debt burdens rise while cash flows decline.
Download the full report

Local office market reports

Get office market trends, data and insights for your commercial real estate market.