According to a new report from commercial real estate firm Transwestern, landlords are expected to remain bullish about current asking rents as demand for office space grows.
Although tour activity has spiked, the report finds that major markets have yet to see โnotable deal volume.โ At the moment, vacancy rates are at 12.6% nationwide, but asking rents are up 1.9% year-over-year.
โWe expect pent-up demand to emerge starting in Q3 with greater traction in Q4, as tenants come off the sidelines,โ the report reads. โWith the market in tenantsโ favor, select companies will take advantage of favorable financial termsโฆ The office is not dead but will evolve to meet new challenges and work patterns.โ
Around 1.6 million jobs were added during the second quarter, which is a key factor in driving office demand. Although most jobs that have been added were within the hospitality and leisure industries, 77% of office-using positions that were lost at the beginning of the pandemic have recovered.
Nashville, Raleigh-Durham and Tampa were among the three markets that saw significant recovery.
Moving forward, many real estate executives believe that Labor Day will signify the true era of office recovery.
