Boston Remains the Leader in U.S. Office Space Demand Recovery in December

Nicole LaRusso

Boston— Boston once again led the national office demand recovery in December, though the Top U.S. markets took a pause amid uncertainty caused by the omicron variant of COVID-19, according to CBRE’s monthly “Pulse of U.S. Office Demand” report.On the national level, activity by companies looking for office space in December was flat with a month earlier, while that of companies completing new leases was down moderately, according to CBRE’s indices. Meanwhile, sublease availability improved slightly, though it remains elevated.“Despite fears and uncertainties around the omicron variant, Boston continued to lead the way in U.S. office market recovery,” said Nicole LaRusso, CBRE Senior Director of Research & Analysis and lead author of the report. “Boston is standing strong and well above the national averages with its strong life sciences profile. While January might show a slowdown, CBRE projects office demand to gain strength in Boston in 2022 as omicron concerns fade and employees head back to the office.” To gauge the pace of recovery, CBRE’s monthly report tracks the three leading indicators of office market activity in the top 12 U.S. office markets: tenants-in-the-market (TIM), which quantifies the amount of office space that companies are actively seeking; leasing activity in the form of finalized lease agreements; and the availability of sublease space. A national view of the indices reveals the progress of the office market’s recovery. For each index, a reading of 100 equates to the pre-pandemic levels of 2018 and 2019. Boston tied with Houston for the highest TIM Index level among the major U.S. metros at 118, 18 percent higher than pre-crisis levels. Although the index dropped by five points from the previous month, Boston is 32 points above the U.S. average of 86.Boston again topped the Leasing Activity Index at 192, slightly down from 209 points in November, mostly due to occupier concerns over the surging COVID-19 omicron variant. Still, Boston was 97 points ahead of the U.S. average of 95.The Sublease Availability Index for Boston dropped four points to 144 in December. Boston is 49 points below the U.S. average of 193 for available sublease space, the lowest level since the pandemic began. Unlike the TIM and leasing indices, a decline in the sublease index is a positive indicator because it shows a shrinking amount of available sublease space.