CBRE is anticipating that the U.S. office market vacancy will see continuous growth over the next few months.
During the second quarter of 2021, there was around 107 million square feet of ongoing office construction. Additionally, the majority of projects that were completed this year began construction prior to the pandemic, during a time when remote working was a rarity.
Now, with the national vacancy rate at 16.5%, it is expected to grow as more supply comes into the market and leasing activity remains slow.
“When you think about all of the uncertainty surrounding office and remote work, there’s a bit of concern there, especially when the national vacancy rate is trending toward 19% or 20%,” said Tom LaSalvia, senior economist at Moody’s Analytics.
Moody predicts that office vacancy will peak at 19.5%, while CBRE anticipates an 18.5% vacancy rate by mid-2022.
However, supply and demand varies depending on the market. For instance, Atlanta’s metro saw some of the highest vacancy rates by the end of the second quarter, but was the fourth-highest in employment growth.
Over the next few years, new office construction is expected to fall drastically.
“There will be demand for offices, and modern offices have to have a range of facilities and work environments that are different from what was normal over the past 10 years,” said Richard Barkham, global chief economist and head of Americas research at CBRE.