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January Office Leasing Activity in Top US Markets Remained Cautious Amid Omicron Concerns

January marks second straight tepid month, though Denver and Seattle saw gains in leasing activity

2022 2월 17

Denver skyline at dusk

The recovery of several large U.S. office markets extended its pause in January amid uncertainty caused by the omicron variant of COVID-19, according to CBRE’s monthly “Pulse of U.S. Office Demand” report.

Office-leasing activity has stayed cautious since omicron flared up in late November. Still, leasing activity tracked by CBRE’s Pulse report remains somewhat close to pre-pandemic levels. Meanwhile, sublease availability increased slightly, still measuring nearly twice its pre-pandemic level.

“Despite this temporary slowdown in lease signings in December and January, the more forward-looking indicator – the increase in companies in the market searching for new office space – bodes well for the office-market recovery soon regaining momentum,” said Nicole LaRusso, CBRE Director of Research & Analysis and lead author of the report.

To gauge the pace of recovery, CBRE’s monthly report tracks the three leading indicators of office market activity in the largest 12 U.S. office markets: tenants-in-the-market (TIM), which quantifies the amount of office space that companies are actively seeking; leasing activity in the form of finalized lease agreements; and the availability of sublease space.

A national view of the indices outlines the scope and trajectory of the office market’s recovery. For each index, a reading of 100 equates to the pre-pandemic levels of 2018 and 2019.

Boston leads the recovery among the 12 markets, buoyed by strong leasing activity by life-sciences companies even though the market’s momentum cooled a bit in January. Also making progress in January were Dallas-Fort Worth, Denver, Los Angeles and Seattle.

The U.S. TIM Index increased by three points to 89 in January. Six of the 12 markets notched increases in their TIM-index readings. Houston (121), Boston (117) and Denver (105) were the only three to exceed pre-pandemic activity levels in January. But four others are close to regaining their 2018-2019 level: Dallas-Fort Worth (96), Chicago (91), Seattle (91) and Manhattan (90).

The Leasing Activity Index fell by eight points in January to 89, likely due to concerns about omicron. Only two of the 12 markets – Denver and Seattle – posted gains in their leasing activity indices in January. Still, those and three others – Boston, Los Angeles and Dallas-Fort Worth - registered leasing activity exceeding pre-pandemic levels.

The Sublease Availability Index rose by two points in January to 195, indicating that the sublease situation got slightly worse. For January, the increase reflected a slowdown in lease-up of space offered for sublease rather than an increase in supply. The sublease index is roughly double its pre-pandemic level. Four markets registered declines in their sublease indices in January: Boston, Chicago, Seattle and San Francisco.

To read the full report, click here.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.