Another Challenging Quarter for Office Market

  • Q4 2020 was the third-worst quarter on record for U.S. office demand with 28.4 million sq. ft. of negative net absorption.
  • On a positive note, office-using employment continued to increase in December and finished the year 6.1% higher than the trough in April.
  • The overall office vacancy rate rose by 90 basis points (bps) to 15.0% in Q4, following a 100-bp increase in Q3.
  • The sublease availability rate of 3.4% is at its highest level since 2004.
  • Suburban markets remained more insulated with less severe rates of negative absorption and occupancy declines than downtown markets.
  • The average gross asking rent slightly declined for the third consecutive quarter, but landlords also are offering more concessions.