Office assets have recently experienced strengthening fundamentals, evidenced by the overall vacancy rate declining 10 basis points to 18.9% for the quarter ending 12/31/24. Net absorption, which measures the difference between space leased and space vacated over a period of time, outpaced construction completions for the second consecutive quarter. Higher quality “prime” office vacancy declined to 15.3% while non-prime aka “commodity” office space remained roughly flat at 19.2%, according to CBRE.
Total US office leasing activity totaled 62 million square feet in Q4, or a 24% quarter-over-quarter (QoQ) increase. This was the highest quarterly leasing total in three years, as shown in the graph below.
As these trends unfold, we’ll be keeping a close eye on the office market to track its continued recovery and future developments.
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