Active office requirements continue to climb upwards

January 09, 2024
  • Jacob Rowden
  • Elena Lanning
  • National office demand continues to trend upwards, marking the third consecutive quarter of improvement as active tenant requirements increased 6.6% quarter-over-quarter, bringing current U.S. levels more than 20% higher than year-end 2022.
  • With a broader volume of tenants entering the market, the U.S. is also seeing options begin to thin in some areas: sublease availabilities, which have been an attractive option for larger tenants looking to expand in a cost-effective way, have already begun to decline nationally and may become increasingly scarce over the course of 2024.
  • A survey of over 400 business leaders of major office tenants released by VTS in December suggested that the wave of rightsizing may be slowing: 69% of respondents indicated that they currently have the right amount of office space, while 19% indicated a desire to expand their current office portfolio and just 12% are still hoping to downsize.
  • Despite the improvement, demand remains subdued compared to pre-pandemic and even during the pandemic prior to broader macroeconomic headwinds. Current active tenant volume is more than 30% below pre-pandemic levels and almost 15% below the previous peak in Q4 2021.