Office Market Shows Signs of Turnaround as Negative Absorption Lessens

  • Q2 had the lowest quarterly level of negative absorption (-7.9 million sq. ft.) since the COVID downturn began, representing a substantial reduction from the 30 million-sq.-ft. average of the three previous quarters.
  • The overall office vacancy rate rose by 50 basis points (bps) in Q2 to 16.5%, slightly below its peak level of 16.8% during the Global Financial Crisis.
  • Downtown markets remained disproportionately impacted. The downtown vacancy rate rose by nearly 80 bps quarter-over-quarter to 15.8%. However, the rate of vacancy increases slowed substantially for both downtown and suburban markets in Q2.
  • Leasing activity continued to improve in Q2, with new deal activity increasing significantly.