JLL has launched its Q3 2024 U.S. Office Outlook report today, which explores the latest performance and demand trends for the U.S. office landscape.
Key findings:
- The tide is beginning to shift for the U.S. office market.
- Leasing activity grew 0.4% quarter over quarter to 50.4 million s.f. and over the past six months reflect 86% of pre-pandemic activity levels.
- With leasing activity growing and inventory removals accelerating, the U.S. office market reached an important milestone in Q3 as, the overall availability rate has peaked and is declining for the first time in more than five years.
- Fortune 100 employers drive greater office attendance.
- As employers such as Amazon, Salesforce and Dell continue to ramp up RTO policies, office attendance rates reached a post-pandemic record in Q3 2024 with large employers pushing to strengthen in-office requirements under hybrid policies.
- Policy evolutions in Q3 have driven the average weekly requirement for Fortune 100 employees to 3.3 days, and over 98% are subject to some form of in-office attendance.
- Sun Belt markets continue to outperform.
- Sun Belt markets outperform national leasing activity, growing by 9.4% quarter over quarter and reaching 96% of pre-pandemic leasing activity over the past six months.
- Activity is largely driven by a pipeline of corporate relocations and expansions out of major metro markets targeting the lower costs of secondary markets (e.g., Atlanta, Austin, Phoenix, Nashville). In Q3, Chevron, SpaceX, X, Verily Biosciences, Canoo, and Koya Medical all announced intent to relocate headquarters from California to Texas.
- Demand for high-quality office space continues, creating supply constraints.
- Tenants are still showing a strong preference for higher-quality and newer offices. 39 of JLL’s 53 tracked markets have lower vacancy rates in supply built since 2015 than older product, and 12 markets have vacancy rates under 10% in new construction.
- However, this top-down demand recovery is beginning to create supply constraints for high-end product, diverting more expansionary demand into the next echelon of buildings (i.e., those constructed between 10-20 years ago, or older buildings that have undergone extensive renovations in the past decade).
Download the report HERE.