The US office market remains stable in the second quarter as inflation and the economy in general could dampen leasing activity

United States office market remained stagnant during the second quarter of 2022 as inflation and the threat of a recession loom.

According to Jones Lang Lasalle Inc., rental activity grew an additional 0.1% over the first quarter. Additionally, office leases reached around 75.5% of pre-pandemic levels, while vacancy rates reached 18.9%.

While it’s unclear how tenants may approach office occupancy in the face of an economic downturn, there are a few factors landlords can consider to prepare for various outcomes.

“Maybe it impacts the terms of their leases and expansion plans; maybe they don’t plan to hire that many people,” said Grant Pruitt, co-founder and president of Whitebox Real Estate.

“Right now, there has been such a drought in the labor market. Companies always try to fill these vacancies and add as many staff as possible. »

While job growth has certainly increased steadily over the past few months, there is also an increase in layoffs that could further impact how companies assess their office footprint.

Transwestern research director Corrie Slewett has yet to note a direct link between high inflation, a slowing economy and leasing activity. However, if inflation continues to climb, the cost of rent will likely also increase and deter tenants from expanding their presence in the workspace.

On the other hand, Slewett adds that tenants might want to occupy space before prices rise, but the third quarter will be a real determinant of the impact of the economy as a whole on the office market. .

Source:
business journals

Jose C. Birney