2023 Occupier Outlook - Office
Occupiers Search for Stability
The health of the office market does not look encouraging as vacancy reached a record 13.4 percent nationally. Occupiers have given back more than 45 million square feet of space since the start of the year. As additional leases signed pre-pandemic roll, the losses are expected to continue. The irony is that the economy has held firm and job growth, a traditional lever for office space demand, has been robust. Recent remote work trends show that a flood of return-to-office work is likely not forthcoming. This is perpetuated because the amount of space required per worker is also shrinking. The flood of sublease space has pushed availability rates for space up to over 23 percent, a record high.
Office Tenant View:
- The bad news for landlords/owners has provided a generational opportunity for occupiers as they seek to renegotiate and push for more flexible terms.
- Tenants are provided more options in sublease space that may have been out of reach as they seek to provide the space and location to entice workers back to the office.
- The time to secure a lease is being extended as negotiations now may involve not just the owner, but also debt holders.
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