Q2 Drop in Demand on Par with Global Financial Crisis Trough

  • COVID-19’s full impact on the U.S. office market was apparent in Q2, with 21.5 million sq. ft. of negative net absorption—on par with the last recession’s quarterly trough of -21.2 million sq. ft. in 2009.
  • While substantial, the quarter's negative absorption is only half of the 41.2 million-sq.-ft. decline in Q3 2001.
  • The bulk of negative net absorption (72%) occurred in California, Texas and the New York metropolitan area. These markets, collectively, comprise 43% of the nation's total office inventory.
  • Total office leasing activity fell by 44% year-over-year in Q2, raising the overall vacancy rate by 70 basis points (bps) for the quarter to 13.0%.
  • Sublease space comprises 2.7% of all available space—up 30 bps from Q1 and reaching a level not seen since 2010.
  • Despite rising vacancy, average gross asking rents rose by 0.3% from Q1 and 3.7% from a year ago to $35.54 per sq. ft.