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According to recent data from the VTS Office Demand Index, in-person touring volume for office space saw a dip in July.
However, a recent report from Cushman & Wakefield paints a slightly more optimistic picture. The firm finds that the office sector is seeing an increase in signed leases, but the data reflecting new office occupancy may be delayed.
Cushman & Wakefield showed that leases in the six U.S. gateway markets are expected to take 15% longer than non-gateway markets, a shift from the first half of 2019 when both of these markets had similar averages.
However, leases and renewal grew by 18% and 7% respectively during the second quarter of 2021. This marked the strongest period for leasing compared to the previous four quarters.
The lag between new leases and when tenants actually occupy a space is impacting the data though.
During the first half of this year, the time between signing a lease and occupancy averaged to 117 days, which indicates that occupiers are eager to snag up space after sitting on the sidelines throughout 2020.
Still, the research shows that the larger the lease, the longer the gap between signing a lease and moving into the space is. For leases over 50,000 square feet, this gap grows by 282 days, which is over nine months.
What this all means is that leases signed in April, May, or June of 2021 may not show up in absorption statistics until the first quarter of 2022.
