CONTACT US
Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}
Valuation for Office Valuation for Office

Insights

U.S. Office Reports

Access the latest quarter commercial real estate results for the office sector nationally. MarketBeat reports analyze quarterly market activity including supply, demand and pricing trends.

Download Q3 2024 Report

For the data behind the commentary, download the full Q3 2024 U.S. Office Report.

The Long-Awaited Pivot Arrives  

The Federal Reserve announced a 50-bps cut to the federal funds rate during its September meeting, marking the beginning of its much-anticipated rate-cutting cycle. Alongside resilient economic performance, confidence continues to form around the prospects of a “soft landing,” which remains the most probable scenario, according to the consensus forecast, but is certainly not guaranteed. 

In Q3 2024, the U.S. economy continued to show its resilience. Overall employment increased by 0.4% QOQ, adding 557,0000 nonfarm jobs in the past three months led by a strong September (+254,000 jobs). Employment growth was strongest in leisure and hospitality (+1.0% QOQ), healthcare and education (+0.8% QOQ), and government (+0.5% QOQ), while office-using employment was flat. If you exclude temporary employment, office-using employment grew by 40,400 jobs in Q3, which is weaker than prior quarters, but still positive. Employment in the information sector peaked in mid-2022 at 3.1 million jobs and has generally flatlined since; currently it has 64,000 (3.6%) fewer jobs than it did then. This has been an important contribution to dynamics in office demand over this time.  

National Vacancy Increased in Q3, but a Third of U.S. Markets Saw Flat or Declining Vacancy Rates  

U.S. office vacancy grew by 55 bps QOQ, marking the 10th straight quarter of increasing vacancy. At 20.9%, national vacancy is at its highest point as recorded by Cushman & Wakefield Research, having increased by 830 bps since Q1 2020. 

In Q3 2024, there were 27 U.S. office markets where vacancy declined and there were another seven markets that remained essentially flat. The largest declines tended to be in smaller Sunbelt markets, such as Roanoke, Fredericksburg, Tampa and St. Petersburg. Other non-Sunbelt markets that saw QOQ drops in their vacancy included San Mateo County and Tulsa. There are 32 markets, out of the 93 tracked by Cushman & Wakefield Research, with vacancy rates below 15%. 

 
Overall net absorption recorded a decline of 18.5 msf for the quarter, with year-to-date (YTD) absorption tracking just shy of -58 msf. The nation has recorded a total of -293.7 msf in cumulative negative net absorption since the beginning of the pandemic. 

Nevertheless, there are signs of improvement across parts of the country. Over half of U.S. office markets (48 of 93) had better absorption numbers this quarter than a year ago and a similar number of markets saw absorption improve QOQ (44 markets). In Q3 2024, 27 U.S. markets had positive absorption, led by San Mateo County (+563,000 sf), Roanoke (+275,000 sf), New Orleans (+265,000 sf), Tulsa (+263,000 sf) and Pittsburgh (+217,000 sf). Additionally, 16 office markets have had over 100,000 sf of positive absorption YTD, including New Haven, Tampa, Memphis, Nashville, Fairfield County, Colorado Springs, Cleveland and Miami.  
 

Sublease Availabilities Flat for Third Quarter in a Row 

In the wake of the pandemic, occupiers responded to the sudden abundance of remote work by putting substantial amounts of space on the sublease market, adding 42.6 msf in the five quarters ending in Q2 2021. Sublease availabilities inventory plateaued around 100 msf for a year from mid-2021 to mid-2022 but grew rapidly again as occupiers looked to shed costs in the wake of rising interest rates. In the five quarters starting in Q2 2022, the amount of space available for sublease increased by 44.4 msf. Over the past five quarters, however, almost no new sublease space has been added; inventory has increased by just 4.9 msf (+3.4%) since Q2 2023. 

The slowing sublease market could be a sign of stabilization for the broader office market as a peak in sublease availabilities is typically a precursor to declining overall office vacancy—as the sublease market can act as a leading indicator of business sentiment. Sublease space hardly budged this quarter, with 1.1 msf added (+0.7%) in Q3. Available sublease inventories have declined year-over-year (YOY) in more than half of U.S. markets. 

The U.S. office space under construction pipeline is down to 35.9 msf, its lowest point in twelve years. The sharp slowdown in the construction pipeline should help insulate the higher quality existing assets in the coming years as new deliveries shrink.  

For the data behind the commentary, download the full Q3 2024 U.S. Office Report.


1 The six U.S. gateway markets include: Boston, Chicago, Los Angeles, New York, San Francisco and Washington, DC

Q3 2024 U.S. OFFICE MARKETBEAT
Access Q3 2024 commercial real estate results for the office sector.
Download Report

Featured Insights: Current U.S. MarketBeats

US Office MarketBeat (image)
MarketBeat

U.S. Office Reports

Access the latest quarter commercial real estate results for the office sector nationally. MarketBeat reports analyze quarterly market activity including supply, demand and pricing trends.
David Smith • 10/10/2024
U.S. National Industrial MarketBeat (image)
MarketBeat

U.S. Industrial Reports

Access the latest quarter commercial real estate results for the U.S. industrial sector. MarketBeat reports analyze quarterly market activity including supply, demand and pricing trends.
Jason Price • 10/10/2024
U.S. National Retail MarketBeat Report (image)
MarketBeat

U.S. Shopping Center Reports

Access the latest quarter commercial real estate results for the retail sector nationally. MarketBeat reports analyze quarterly market activity including supply, demand and pricing trends.
James Bohnaker • 10/10/2024
U.S. National Multifamily MarketBeat (image)
MarketBeat

U.S. Multifamily Reports

Access the latest quarter commercial real estate results for the U.S. multifamily sector. MarketBeat reports analyze quarterly market activity including supply, demand and pricing trends.
Sam Tenenbaum • 10/10/2024

Related Insights

Above the clouds (image)
Podcast • Economy

Cushman & Wakefield: Behind the Numbers

Our experts cut through the noise to provide you concise commentary on only the most important economic and sector-specific commercial real estate data points.
11/27/2024
Office Fit Out Cost Guide
Research • Workplace

Office Fit Out Cost Guides

These Guides are an essential tool to assist in corporate real estate decision-making regarding fitting out, retrofitting & reinstating office space.
3/21/2024
market trends
Article • Investment / Capital Markets

​​Deciphering Today’s Debt Market​

Take an in-depth look at everything you need to know about today’s debt market from who the buyers and sellers are in the current landscape and how they are addressing today’s challenges to which property sectors are the most favorable and why.
Abby Corbett • 3/19/2024

Ready to talk?

We’re on hand to help. Get in touch and we can assist with any additional information you need.

With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on  Cookies

More Options
Agree and Close
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS