Office market on road to recovery thanks to tighter supply rather than booming demand

""Stability really kind of creeping its way into recovery," said Stefan Weiss, the head of U.S. office research for CBRE."

""What we're really seeing is slow and steady office demand, coupled with virtually no new supply," he said. "So, we're going to see this slow return back to normalcy really driven by the supply side as opposed to the demand side.""

""The overall vacancy rate dipped slightly to 18.6%, but it still has a way to go to reach the long-term average vacancy rate of about 12-14%.""

""If the bottom tier of office buildings can be pruned from the market, what they're 'colloquially calling zombie buildings,' the national vacancy rate could drop to just over 13%.""

The office market experienced its strongest first-quarter leasing activity in four years, with over 56 million square feet leased. The vacancy rate decreased to 18.6%, while asking rents increased. CBRE predicts annual leasing will exceed 2019 levels, with a sustained recovery indicated by an 11% increase in leasing over the past eight quarters. Prime buildings have a lower vacancy rate of 12.7%. Developers are reducing new office construction, leading to a tighter supply that is helping balance the market.

Read at KOMO