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Analysis

Urban Office Facing 'Structural Downshift' As Leases End

Office vacancy levels in CBDs of primary metros are up 30 basis points to 18.6 percent.

Offices in central business districts are facing a “structural downshift” as more and more floorpans in cities’ urban downtowns come up for lease.

“While briefly positive in the second half of 2021, omicron-induced delays to workplace return plans set net absorption back on a negative path this year,” Marcus & Millichap analysts note in a new report on the state of the office sector. “After more than two years of waiting, some companies are finally executing on lease terminations. This is especially true of mid- and low-tier space in the nation’s largest central business districts.”

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Lynn Pollack

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