New Report: Absorption Will Continue to Slow into 2023 Amid Economic Uncertainty
December 2, 2022
The NAIOP Research Foundation has published the NAIOP Office Space Demand Forecast for Q4 2022.
Read the report »
- Office market vacancy rates rose to 17.1% in the third quarter of 2022 as the completion of new space outstripped net absorption. This marks the highest vacancy rate since the third quarter of 1993.
- Class A buildings continue to outperform the rest of the sector as tenants migrate to spaces that offer more flexible layouts and modern amenities.
- Leading economic indicators and an inverted yield curve point to growing risks of a recession in 2023. Occupiers are growing more cautious, opting to sublease space, and choosing smaller footprints when leases come up for renewal.
- Given these trends, net office space absorption in 2023 is forecast to slow to only 8.1 million square feet for the full year, following absorption of 7.1 million square feet in the fourth quarter of 2022.
- Absorption is forecast to rebound in the first three quarters of 2024 to a total of 13.3 million square feet.