As we’re all well aware by now, the national office space sector is grappling with a host of problems resulting from trends in remote work, increasing interest rates, widespread job cuts, and the reduction of office space. Measures such as office vacancy and occupancy rates are often discussed when assessing the health of office markets. However, comparing office sales to office leasing can also provide interesting perspectives.
Office sales, similar to leasing volume, have shown a decline in recent months. As per data from Yardi Matrix, office sales in the U.S. have reached $9.4 billion so far this year, indicating a significant reduction in sales activity compared to the first quarter of 2022 when the national sales volume exceeded $20 billion. Following a major slump in the second quarter of 2020, office sales volume saw a peak in the fourth quarter of 2021 at $40 billion, before stabilizing at around $25 billion throughout the first three quarters of 2022.
MarketTotal Sales Volume YTDLeasing Activity YTDBoston$721 million1,548,017Manhattan$699 million5,074,796Greater Los Angeles$629 million2,659,742Washington, D.C.$509 million1,125,514Chicago$354 million2,841,337Dallas$329 million2,029,337San Francisco$316 million1,180,883San Diego$307 million566,044Phoenix$270 million1,406,789Miami$207 million641,724Sources: Yardi Matrix National Office Report May 2023; Cushman & Wakefield Q1 2023 office data
Large office transactions are having a greater impact on market sales volume, like in New Jersey, which has been the second most active market in 2023 so far, accounting for $807 million in office deals. But that figure is mostly driven by Veris Residential’s sale of a three-building office complex with 1.9 million square feet in Jersey City.
Read more at Propmodo.