Q1 Records Only $6.5 Billion in Office Sales as Decreasing Demand Brings 66% Year-Over-Year Drop
In the first quarter of 2023, the U.S. office market continued to face several challenges, from rising interest rates to declining values, decreasing demand and the looming threat of maturing loans. With so many headwinds impacting the sector, office landlords are faced with tough decisions as the future of offices remains unclear, especially as sales activity continues to rapidly decelerate, the latest U.S. office market report shows.
Highlights from the report include:
- The average U.S. office listing rate stood at $38.22, rising 1.5% year-over-year
- Up 20 basis points year-over-year, the national office vacancy rate rested at 16.7%
- Under-construction office space totalled 117.5 million square feet as of March, of which only 6.1 million broke ground in Q1
- Office sales stood at $6.5 billion in the first three months of 2023, with assets trading at $195 per square foot
- Denver reached the highest vacancy rate outside the South at 19.4%
- At $66 per square foot, Chicago posted the lowest sales price among leading office markets
- Austin listing rates fell 5.5% year-over-year, influenced by rising vacancies and expensive spaces coming off the market
- Boston closed Q1 with the largest under-construction pipeline in the U.S. at 13 million square feet as the life sciences sector continues to thrive
To read the full report, visit the Commercial Edge website.
After Nearly 2 Decades of Decline, What’s Next for Office Supplies Stores?
The pandemic has turned millions of consumers around the country into office managers, fashioning workspaces out of portions of their homes and stocking them with all the things necessary to get their jobs done.
Under different circumstances, the work-from-home movement could have led to a renaissance for office supplies retailers. While large corporate buyers have long relied on commercial dealers — the largest of which also happen to be tied to the largest office supply store brands — consumers depend on retail for their home office needs. But for years they have been buying less from the retail specialists, namely Staples and ODP Corp’s Office Depot and OfficeMax banners. Store numbers and sales have steadily been shrinking, only to run into the disruptions of the pandemic.
Along with traffic declines, the COVID-19 crisis brought with it both a remote work revolution and an accelerated shift in spending with e-commerce and generalist players, both of which offer convenience and highly competitive pricing. As the category adjusts to new trends, Staples and ODP are having an existential moment. The former, owned by private equity firm Sycamore, has been in pursuit of ODP and its retail business. A deal would leave just one major player left to dominate a shrinking, changing, uncertain retail sector.
To read the full article, visit the Retail Drive website.
People in Toronto Won’t Stop Working From Home and It’s Impacting the City
Toronto office vacancy rates have just hit their highest level since 1995. Try as they might to get employees back at their physical offices, scores of Canadians continue to work from home on a permanent or hybrid basis, and it’s showing up in a big way on historical commercial data charts.
A new report released by the multinational commercial real estate services and investment firm CBRE states that the overall national office vacancy rate increased at 17.7% over the first quarter of 2023. CBRE explains the significance of these trends for markets like Toronto and Vancouver, noting that “only three years ago, tenants in search of a typical 5,000 sq. ft. unit may have had fewer than five options” in either of these cities. “Today, options are much more numerous, and companies now have the opportunity to find spaces that align with their corporate identity and are located adjacent to core transit hubs,” reads the new CBRE report.
To read the full article, visit the BlogTO website.