Has flight to quality run its course in U.S. offices?

graph of U.S. office availability by class type (trophy, class A, class B/C) from 2015 to 2024
  • Prior to the pandemic, occupiers were flocking to higher quality office spaces to attract top talent. The trend was exacerbated by COVID, as higher-quality office spaces started being used to lure existing employees to come into the office.
  • Historically, trophy and class A office spaces have accounted for roughly 70 to 75% of leasing activity. However, office leasing activity across U.S. gateway markets has favored class B and C spaces to a historically high degree (more than 40%), pushing trophy and class A down to just under 60% year to date.
  • Most gateway markets are still experiencing flight to quality. Chicago, Manhattan and Houston have seen over 70% of leasing activity occur in trophy and class A spaces year to date. On the other hand, Washington, D.C. and Boston experienced a blip in the same assets of 29.2% and 34.7%, respectively. In Washington, D.C., the limited availability of new trophy assets amid government renewals influenced the low activity. In Boston, increased lease rollovers yielded higher class B leasing activity; however, experts anticipate an uptick in trophy and class A spaces in the second half of the year.

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