Rising US office leasing still remains below pre-pandemic pace, signaling a long-term structural shift in the market rather than a simple cyclical upturn. While leasing activity saw a year-over-year increase in the third quarter, total volume for 2024 remains nearly 30% below the historical pre-COVID average, underscoring a fundamental recalibration of corporate real estate needs.
A key trend shaping this new landscape is a distinct and continued preference among tenants for smaller, more efficient office spaces. As companies adapt to hybrid work models, the average lease size has shrunk by approximately 27% compared to the pre-pandemic norm. This downsizing is coupled with a pronounced “flight to quality,” where demand is consolidating in premium, amenity-rich buildings designed to be experiential destinations that attract and retain talent. Leasing in top-tier “Trophy” properties now exceeds pre-pandemic averages, while activity in older Class B and C buildings has fallen by over 30%. This bifurcation highlights a new purpose for the office, driving demand for flexible terms and higher-quality environments.
The recovery is also uneven across different regions. While some markets are outperforming, they are not immune to the broader trends. Charlotte, North Carolina, for instance, has leasing activity above its pre-pandemic average but simultaneously struggles with a record-high vacancy rate, proving that even strong local economies must contend with the new paradigm of space efficiency.
