JLL has launched its Q4 2024 U.S. Office Outlook today which explores the latest utilization and demand trends for the U.S. office landscape. Interestingly, more Fortune 100 companies will strengthen in-office policies in 2025.
Key findings:
- U.S. office recovery reaches post-pandemic high.
- Driven by consistent, accelerated leasing activity throughout 2024, Q4 was the first quarter of positive net absorption since Q4 2021. Driven by increased office attendance requirements and the slowing of downsizing rates, Q4 leasing volume reflected 4.9% growth QoQ and 17.6% growth YoY, with Q4 volume surpassing 92% of pre-pandemic averages.
- Five-day in-office mandates surge.
- As employers such as Amazon, The Washington Post, and AT&T continue to ramp up RTO policies, JLL revealed that as of Q4, 21% of Fortune 500 employees are required to attend the office five days per week.
- Policy evolutions in Q4 have driven the average weekly requirement for Fortune 100 employees to 3.4 days, and over 99% are subject to some form of in-office attendance.
- Occupancy loss remains concentrated as tenants flock to amenitized buildings.
- In Q4, just 11.4% of buildings experienced an increase in vacancy rate, the lowest share of the market in the past ten years. This is partly due to an intense flight to quality that continues to play out. Many of the downsizing leases executed throughout the pandemic have also upgraded to newer and more amenitized buildings, leaving large chunks of vacancy in older assets or even vacating entire buildings in some instances.
- 2025 Outlook: Supply pressures will mount for the office sector.
- Despite higher vacancy levels in older, less amenitized office spaces, most markets remain undersupplied with high-quality workspaces which may slow the levels of transaction activity in some markets. In 2025, this lack of supply will cause a dependency on improved capital flows to alleviate some of the pressures in the market.
