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Office Performance Remains Fragmented,
Driven by a Variety of Company Approaches to Office Usage
Metros report mixed net absorption trend in the first quarter. The fourth quarter of 2023 marked positive office net absorption across most major U.S. markets, resulting in the greatest three-month total since late 2021. Yet, some of this positive momentum ebbed in the first three months of 2024. Net absorption shifted back into the red nationally; however, only 11 markets had reductions over 500,000 square feet. The markets with increasing vacancy logged minimal quarter-over-quarter adjustments that rarely crested 50 basis points. Of the 50 major markets tracked, 18 noted falling or flat vacancy in the first quarter. San Jose led this group with a 90-basis-point drop, the metro’s most significant decline since late 2021. It is still too early to tell whether the office landscape is settling, but multiple indicators suggest the sector is at least slowing its previously rapid descent.