COVID Drove Office User Preferences in U.S. Towards Renewals, Smaller Footprints
Based on new research from global commercial property consultant CBRE, office renewals claimed a significantly bigger portion of the largest 100 U.S. office leases in 2020 than a year earlier, underscoring that many companies opted to postpone relocations, contractions and other real-estate changes until they get more clarity on how the economic recovery and pandemic response will play out.
In many ways, the largest 100 U.S. office leases signed in 2020 reflect trends in the broader office market as well as the findings of CBRE's latest survey of office-using companies. Renewals accounted for 43 percent of the combined square footage of those 100 leases, up from 33 percent in 2019. The cumulative square footage of those big leases (29 million sq. ft.) marked a 32 percent decline from a year earlier, mirroring the 36 percent decline in all U.S. office leasing last year.
Similarly, the average size of leases in the largest 100 declined to 290,000 sq. ft. in 2020 from 422,000 a year prior.
"Office leasing was tentative last year for well-known reasons," said Whitley Collins, Global President of CBRE Advisory & Transaction Services. "Activity likely will perk up in 2021 along with the continued rollout of COVID-19 vaccines, an improving economy, and a gradual return to the office by a growing number of workers. Meanwhile, companies will map out their long-term office strategies with new emphasis on determining the most efficient use of workspace with more employees working flexibly from multiple locations."
As it has for the past several years, the technology industry last year claimed the largest share by square footage (roughly 24 percent) of the largest 100 leases. Tech kept its lead even as the industry's office-leasing activity declined by more than half from 2019. Claiming the second-largest share was the government and nonprofit sector (16 percent), followed by the legal industry in third.
On a market basis, Manhattan and Washington, D.C., were the clear leaders for share of the largest 100 office leases by square footage at 21 percent and 17 percent, respectively. Seattle claimed the third-largest share with 2.2 million sq. ft. in new leases by tech firms.