Revenge of the Suburbs
Nearly three years since the start of the pandemic, the state of the office market is continuing to reveal itself. The suburbs appear to be faring better than urban markets. Urban markets enjoyed years of gains as employers sought proximity to talent who were moving to amenity-rich city centers in droves.
Not surprisingly, in the 10 largest U.S. metros, 58.9 percent of new Class A office deliveries have taken place in urban office markets over the past decade, compared to 41.1 percent in suburban markets. This was not always the case, between 2000 and 2010, the script was flipped with more than half of all new Class A office deliveries opening in the suburbs.
However, since the start of 2020, there has been a shift back to the suburbs. As work-from-home and flexible work policies have been the norm, difficult commutes, health concerns and unpredictable
public transportation have made suburban locations more attractive. Further, suburban office locations are generally less expensive to lease. While this shift may be temporary, early evidence suggest occupiers are favoring space on the outskirts of town.
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