Will office demand rebound in 2022 after finishing 2021 on strong note?
January 16, 2022 | Liz Kiesche
• Demand for office space finished 2021 on a strong note, and is likely to pick up on the second half of 2022 as workers continue to head back to the office, according to the National Association of Realtors’ research economist Scholastica Cororaton.
• The gains in Q4 2021 were driven by an increase in office space absorption in secondary commercial markets like Atlanta and Austin. Primary markets, like Chicago and New York struggled. “Flat rent growth in primary markets outpaced by high inflation and higher cost of borrowing means investors are more likely to step away from these markets in 2022,” she writes in an NAR blog.
• Net office absorption during Q4 2021 amounted to 14.5M square feet, a jump from 5.6M square feet in Q3 2021. But the sector still has a long way to go as office occupancy as of Q4 2021 is still down by 117.8M square feet from pre-pandemic levels.
• Atlanta, (2.3M SF), Austin (2M SF), San Jose (2M SF), Dallas-Fort Worth (1.9M SF), Houston (1.3M SF), and Seattle (1.3M SF) led absorption of office space by secondary markets in H2 2021, Cororaton said, citing CoStar market data.
