Office Demand Drops in Q1 2021, Although More Tenants Shop for Space

  • Negative net absorption of 34.8 million sq. ft. in Q1 was the highest quarterly drop in demand of the current cycle.
  • The overall office vacancy rate rose by 1 percentage point in Q1 to 16.0%, still nearly a full point below its peak level during the Global Financial Crisis.
  • Downtown markets remained disproportionately impacted. The downtown vacancy rate rose by nearly 1.4 percentage points quarter-over-quarter to 15.1%.
  • Leasing sentiment and tenant activity began to improve—in some cases dramatically—by the end of Q1.