10 Office Markets Facing Deep Challenges
The top office markets in the US are seeing negative absorption, flat or decreasing rents and rising vacancy rates.
November 25, 2020 | Kelsi Maree Borland | GlobeSt.com
The top 10 office markets in US are continuing to struggle amid the ongoing pandemic. In the third quarter, office performance deteriorated compared to the second quarter, illustrating the depths of this downturn. Negative absorption, flat or decreasing rents and rising vacancy marked the top office markets in the US, according to new research from Colliers International.
The top markets from the report include Manhattan, Washington DC, Chicago, Houston, Los Angeles, San Francisco, Atlanta, Dallas, Seattle and Boston. Among these markets, Chicago was the only city to see positive absorption in the third quarter, but the report expects this to be temporary. It also wasn’t enough to offset the losses. Together, all 10 markets had 15.7 million square feet in negative office absorption, accounting for nearly half of the 37.1 million square feet in total negative office absorption nationwide.
Negative absorption came hand-in-hand with rising vacancy rates. With the exception of Chicago, vacancy increased in all of the top markets. Tech-heavyweights San Francisco and Boston had the biggest jump with vacancy rates rising 160 and 220 basis points respectively in the third quarter. Manhattan’s vacancy rate increased 170 basis points, while Los Angeles saw a 160 basis point bump in vacancy. On the other hand, Chicago’s vacancy rate fell 20 basis points, thanks largely to leasing activity that produced 228,309 square feet of absorption.
