National Office Market
Average Asking Rent (Price/SF) |
$30.43 |
Vacancy Rate (%) |
16.4% |
Net Absorption (SF) |
-21,926,776 |
The U.S. office market continued to weather the challenges created by the COVID-19 pandemic in the second quarter of 2021. Significant progress was made with respect to vaccine distribution and the slowing of viral transmission, which has allowed the removal of many business and occupancy restrictions nationwide. Still, office market fundamentals are under pressure. An extended period of low leasing activity has contributed to steady occupancy losses, with net absorption measuring -21.9 million square feet in the second quarter. The vacancy rate recorded 16.4%, a 63-basis-point increase from the prior quarter and a 314-basis-point increase over the past year. More than 11.5 million square feet of new construction delivered during the second quarter. An additional 86.0 million square feet is still under construction, the smallest active pipeline since fourth-quarter 2018. Asking rents have continued to increase since the pandemic began; however, the growth rate has slowed in each of the last three quarters. Average asking rents rose 2.1% over the past year, reaching $30.43/SF. Rent appreciation has been driven by new deliveries, often with top-of-the-market rents. While asking rents have been stable through the pandemic, net effective rents have steadily declined with asset owners offering elevated concessions to attract and retain tenancy.