originally published by NAIOP Research Foundation with permission to repost for NAIOP Charlotte

The NAIOP Office Space Demand Forecast

Forecast Absorption Surges to Positive Gains in Q4 and Beyond

The NAIOP Research Foundation has published the NAIOP Office Space Demand Forecast for Q4 2021.

Key Takeaways:

• Although office net absorption remained negative throughout 2021, it is gradually climbing toward the positive side of the scale. Total net absorption in the third quarter of 2021 was -5.2 million square feet, back from a near-record of -34.8 million square feet at the end of the first quarter of 2021.
   
• As the unemployment rate declines, more workers return to the office and the economy continues to improve, the office space net absorption forecast has been revised upward from 1.8 million square feet to 8.3 million square feet in Q4 2021.
   
• Although the number of people currently employed in professional and business services, financial activities, and information industries is only 1.5% lower than in February 2020, office utilization rates remain much lower than before the pandemic due to continued concerns about coronavirus transmission.
   
• While a long-term increase in remote and hybrid work arrangements is likely to reduce demand for office space, this should be more than offset in the coming years by employment growth in office-using industries.
   
• Demand for new office buildings is favorable, as new builds offer the flexible work environments demanded in today’s more uncertain world. This trend should continue over the next year.

View the full report.