Office Space Demand Below Seasonal Norms, But That’s Okay
May 26, 2022 | Paul Bergeron | GlobeSt.com
Demand for office space fell by just a tick of 1.5 percent nationally from March to April, according to a VTS Office Demand Index (VODI) analysis, representing a departure from the seasonal norm that typically calls for increasing demand during the month of April.
Some CRE analysts however see that as mostly insignificant and expect gradual improved demand coming in 2022 and beyond despite VODI showing that demand for office space now sits at two-thirds of normal.
Summer Leasing ‘Always Slows’
Petra Durnin, head of market analytics for Raise Commercial Real Estate, tells GlobeSt.com that office demand always slows in summer months.
“It is too soon to tell if demand will pick back up in the fall or if we are heading into a recession, and if so, for how long,” Durnin said. “Perception of an impending slowdown has prompted some companies to begin layoffs to cut costs, but so far, it hasn’t impacted a significant amount of the workforce.
“Concerns about a recession, which could prove to be short-lived, create uncertainty that hinders companies working to establish a clear way forward that will result in a wait-and-see approach about leasing new office space.
“During the past two years, hiring was such a difficult and costly process for so many companies that layoffs might not be their first cost-cutting measure to prepare for a downturn.
“Recent stock drops have also stirred recession concerns, but corrections are a common occurrence and not necessarily indicative of a softening market. The hybrid model isn’t going away and more employees are expecting flexibility in the workplace.
