Tech Office Leasing Activity Drops in Q2 2020
Government shelter-in-place mandates and extended work-from-home policies caused a reduction in office leasing activity by technology companies in Q2 amid an economic recession. U.S. office leasing by the tech industry was down 46% from the quarterly average in 2019, decreasing tech’s share of total U.S. leasing activity to 20.5% in Q2 from 21.7% in 2019. Total U.S. office leasing activity was down 44% from the 2019 quarterly average.
Among the 10 markets reporting the most tech leasing volume in Q2, the year-over-year change in tech leasing activity ranged from +71% (Atlanta) to -74% (San Francisco Bay Area). Washington, D.C., and San Diego were the only other markets with volume increases, while Manhattan also had a large decrease.
The five markets with the most leasing volume in Q2 were Washington, D.C., San Francisco Bay Area, Atlanta, Manhattan and Dallas/Ft. Worth. Overall, software companies were the most active, accounting for 51% of Q2 tech leasing volume, followed by tech business services (18%) and e-commerce (9%).
Impacts to office market fundamentals are still unfolding, as pricing changes typically lag reductions in demand by several quarters. Thus far, downtown San Francisco and Seattle have been the most impacted, with average asking office rents down by 4% to 5% in Q2.
U.S. Office Leasing Activity by Tech Industry, Q2 2020
Top 10 Markets by Square Footage Leased
Source: CBRE Research and CBRE Tech Insights Center, Q2 2020. Leasing activity includes direct, sublease and renewal transactions.