Office leasing activity improves in second quarter with fastest rate of growth since 2021 Q2

July 13, 2023
  • Jacob Rowden
  • Elena Lanning
  • After three consecutive quarters of decline, U.S. office leasing has begun to rebound in the second quarter, with gross leasing volume growing 11.6% quarter-over-quarter (QoQ), the fastest growth rate since Q2 2021.
  • As a testament to broad momentum, nearly two-thirds of tracked markets, 35 of 53, saw QoQ leasing growth. Since Q1 2019, there have only been two quarters with a greater share of markets seeing positive momentum: Q1 2019 when 74% of markets saw QoQ growth and Q1 2021 when 72% of markets were growing.
  • Tentative signs of large-scale requirements returning are appearing: after falling to the lowest level since 2013, Q2 saw an over 10% increase in the number of lease transactions above 100,000 s.f. signed, indicating that the intense defensiveness among a vast majority of office occupiers is beginning to fade.
  • The U.S. office market saw other promising indicators in the second quarter: net absorption remains negative but has decelerated, and sublease vacancies have reached an inflection point, with the pace of new additions beginning to slow.
  • June CPI data slowed to its lowest growth rate since March 2021, as price growth year-over-year declined to 3.0 percent, quickly approaching Federal Reserve targets and signaling a near-term easing of interest rates.