The Office Sector Is Slowly Recovering
The most recent CommercialEdge Office National Report revealed that the commercial office industry is slowly recovering from the pandemic.
According to the report, the average national full-service equivalent listing rate grew 26 cents from December to $38.32 per square foot in January.
The report stated that office-using sectors have performed well in 2020 and office-using employment is on the path to recovery to pre-pandemic levels. However, the vacancy rate continues to climb.
This is particularly evident in cities with high lease rates like San Francisco, New York City, and even secondary cities like Nashville and Austin.
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“While both are major beneficiaries of coastal outmigration, they are also dealing with major supply pressure. Nashville’s office stock increased 4.1% last year, while Austin’s rose 3.9%,” the report said. “Combining new stock with a heavy tech industry predominantly working from home has led to the uptick in vacancy.”
Despite the growth of office vacancies, the coworking sector has been a light within the industry as some commercial real estate firms adopt revenue-sharing agreements to bring tenants back in.
This is helpful as many businesses are still hesitant to sign onto long-term leases and look to flexible workspaces for an alternative workspace solution.
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