Recent research from NAIOP reveals that office sector absorption is likely to slow dramatically in 2023, with predictions for the entire year coming in just slightly higher than fourth-quarter 2022 estimates alone.

Net office space absorption in the fourth quarter is predicted to be 7.1 million square feet, and absorption for the entirety of 2023 is estimated to clock in at 8.1 million square feet, according to Hany Guirguis, Ph.D., of Manhattan College and Michael J. Seiler, DBA, of College of William & Mary. The pair forecast absorption in the first three quarters of 2024 to total 13.3 million square feet.

"The mere threat of a recession has caused tenants to take a defensive posture and become more cautious when renewing leases, with many instead choosing to move to a smaller, newer and more flexible footprint," Guirguis and Seiler note. "Moreover, the large supply of space available for sublease weakens rental rates and contributes to lower net absorption."