Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}
Valuation for Office Valuation for Office

Insights

U.S. Office Reports

Access the latest quarter commercial real estate results for the office sector nationally. MarketBeat reports analyze quarterly market activity including supply, demand and pricing trends.

Download Q1 2024 Report

For the data behind the commentary, download the full Q1 2024 U.S. Office Report.

Office Employment Growing More Slowly than Rest of the U.S. Job Market  

Employment growth in the U.S. continues to surprise to the upside. At the end of March, nonfarm employment was up 1.9% YOY and 0.5% QOQ. That growth has been driven by sectors such as construction, healthcare and government, all of which are sectors that grew by over 1.0% in the first quarter of 2024. 
 
Office-using employment growth, however, has been running at about a third the pace of nonfarm employment. Office-using sectors added 70,000 jobs this quarter (+0.2%), which is an improvement on the 2023 quarterly average (+38,500 per quarter), but well below the nearly 250,000 jobs per quarter added in 2022. Professional and business services fared relatively better with job growth hitting 0.4% QOQ and 2.3% YOY. Information employment declined 1.2% YOY, and after shrinking by 0.2% this quarter, financial services has grown only 0.3% since March of 2023 according to the U.S Bureau of Labor Statistics.

 

Year Starts with Soft National Demand, but Some Markets Saw Improvements 

The first quarter of 2024 marked the ninth straight quarter of negative net absorption across the U.S. Nationally, quarterly absorption came in at -31 msf, bringing the four-quarter rolling total to -78 msf. This is the lowest level in two-and-half years but is still 37% better than the mid-2021 trough of -125 msf. 
 
Despite the weaker trends at the national level, some markets saw positive demand for space. In Q1 2024, 26 of the 90 U.S. markets tracked by Cushman & Wakefield registered positive net absorption. Twelve of those markets had quarterly net absorption that exceeded 100,000 sf: Puget Sound - Eastside (+857,000 sf), El Paso (+261,000 sf), Birmingham (+234,000 sf), Nashville (+215,000 sf), Memphis (+205,000 sf), San Mateo County (+158,000 sf), Minneapolis/St. Paul (+151,000 sf), Oklahoma City (+146,000 sf), Austin (+138,000 sf), Orlando (+114,000 sf), Kansas City (+107,000 sf) and Buffalo (+107,000 sf). 
 
Other markets with positive absorption were scattered across various U.S. regions: Florida (Tampa, Jacksonville, Miami, Palm Beach); the Midwest (Omaha, Cleveland); the Northeast (New Haven, Hartford); the South (Greensboro, Greenville, Charleston, New Orleans, Columbia); and the West (San Jose). 

 

Construction Pipeline Now at 11-Year Low 

National vacancy increased by 70 bps in the first quarter, exceeding the 20% threshold for the first time on record. At 20.2%, overall U.S. vacancy is up 210 bps YOY and 770 bps higher than at the start of 2020. Vacancy, however, declined in a fifth of U.S. markets, and it remains below 15% in 34 markets. Class A vacancy—accounting for new construction deliveries—was up 50 bps QOQ. 
 
Part of the recent vacancy increases is related to new office product delivering to the market. There have been 194 msf of new office deliveries since the beginning of 2020, the equivalent of 3.5% of current U.S. inventory, which has pushed up vacancy over the past four years. Vacancies have increased even more starkly in high-construction markets. For example, in the 10 U.S. markets where office deliveries have exceeded 8% of current inventory, vacancy has increased by nearly 1,200 bps on average since Q1 2020—400 bps more than the national increase. In general, although this new product is adding to vacancy, it is leasing up well and is pulling demand away from existing, lower-quality assets.   

 

In today’s interest rate environment, the construction pipeline continues to shrink. There is now 49.7 msf of office space under construction in the U.S., which is the smallest amount since early 2013. The national construction pipeline is now the equivalent of 0.9% of current inventory, which is just a third of what it was in early 2020. There are now only nine U.S. markets where the construction pipeline exceeds 2.0% of existing inventory.

 

Occupiers making their leased space available for sublease has been another driver of rising vacancy rates. After remaining flat for three quarters in 2021, sublease availabilities increased by 54% over the past two years. The pace of growth, however, has generally been slowing down. At 156.5 msf, the current available sublease inventory increased by 4.1% QOQ, which is well below the average growth rate (5.9%) in the previous six quarters dating back to the middle of 2022. Sublease availabilities declined or stayed flat in 38 U.S. markets, including Austin, Baltimore, Miami, Nashville, New Jersey, Oakland, Philadelphia, Phoenix, Salt Lake City, San Jose and Washington, DC.

 

For the data behind the commentary, download the full Q1 2024 U.S. Office Report.

Q1 2024 U.S. OFFICE MARKETBEAT
Access Q1 2024 commercial real estate results for the office sector.
Download Report

Featured Insights: Current U.S. MarketBeats

US-MarketBeat-webcard-Q1-2024---OFFICE
MarketBeat

U.S. Office Reports

Access the latest quarter commercial real estate results for the office sector nationally. MarketBeat reports analyze quarterly market activity including supply, demand and pricing trends.
David Smith • 4/12/2024
Industrial MarketBeat Q1 2024
MarketBeat

U.S. Industrial Reports

Access the latest quarter commercial real estate results for the U.S. industrial sector. MarketBeat reports analyze quarterly market activity including supply, demand and pricing trends.
Jason Price • 4/12/2024
US-MarketBeat-webcard-Q1-2024---RETAIL
MarketBeat

U.S. Shopping Center Reports

Access the latest quarter commercial real estate results for the retail sector nationally. MarketBeat reports analyze quarterly market activity including supply, demand and pricing trends.
James Bohnaker • 4/12/2024
Multifamily MarketBeat Q1 2024
MarketBeat

U.S. Multifamily Reports

Access the latest quarter commercial real estate results for the U.S. multifamily sector. MarketBeat reports analyze quarterly market activity including supply, demand and pricing trends.
Sam Tenenbaum • 4/12/2024

Related Insights

Above the clouds (image)
Podcast • Economy

C&W: Behind the Numbers

Our experts cut through the noise to provide you concise commentary on only the most important economic and sector-specific commercial real estate data points.
4/24/2024
Office Fit Out Cost Guide
Research • Workplace

Office Fit Out Cost Guides

These Guides are an essential tool to assist in corporate real estate decision-making regarding fitting out, retrofitting & reinstating office space.
3/21/2024
market trends
Article • Investment / Capital Markets

​​Deciphering Today’s Debt Market​

Take an in-depth look at everything you need to know about today’s debt market from who the buyers and sellers are in the current landscape and how they are addressing today’s challenges to which property sectors are the most favorable and why.
Abby Corbett • 3/19/2024

Ready to talk?

We’re on hand to help. Get in touch and we can assist with any additional information you need.

With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on  Cookies

More Options
Agree and Close
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS