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Office market recovery widens gap between prime space and average assets

CBRE data shows net absorption hit 12.6 million square feet in Q2, while overall office vacancy fell 30 basis points to 18.3 percent.

Reported · Written up by our desk · Commercial

The office market is showing a sustained rebound, with CBRE reporting national net absorption of 12.6 million square feet in the second quarter, nearly double the prior quarter and the ninth straight quarter of positive demand.

Leasing activity rose 16 percent year over year, and the report said it is on pace to surpass 2022, which would be the strongest year on record. Overall vacancy dropped 30 basis points to 18.3 percent, the largest quarterly decline since 2015, while asking rents are growing at their fastest pace in six years.

The article highlights how national averages can mask differences, pointing to a prime vacancy rate of 12.3 percent versus overall vacancy at 18.3 percent. It also contrasts Midtown Manhattan prime vacancy at 2.2 percent with older suburban office parks described as effectively unfinanceable.

Commercial Observer argues that the meaningful performance gaps are not only between labeled tiers, but can also exist within them, citing Leesman research across 1,322 workplaces and 476,341 responses. In its study, workplaces with unassigned seating scored an average of 79 on the Leesman Index when the space offered genuine variety, compared with 51.1 when it did not.

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