Tech Office Leasing Implodes 46 Percent from Coronavirus Outbreak in U.S.
According to a new report by CBRE, office momentum in the U.S. slowed in the second quarter of 2020 for technology companies' leasing of commercial space, though a few markets posted sizable gains in activity.
U.S. office space signed for lease by tech companies in the second quarter amounted to more than 6.8 million sq. ft., which marks a 46 percent decline from last year's quarterly average. That's roughly in line with the 44 percent decline in new office leases by all industries last quarter. Overall, tech remains the most active industry in U.S. office leasing, accounting for 20.5 percent of square footage newly leased last quarter.
"The tech industry has proven resilient during the pandemic with many companies experiencing increasing demand for their products and services," said Colin Yasukochi, Executive Director of CBRE's Tech Insights Center in San Francisco. "Even so, many tech companies' real-estate plans have been put on hold until more clarity emerges on business conditions and the economy. When tech companies return to the office market, they'll likely find better leasing opportunities at lower costs."
The only other market within the 10 most active to post a gain in the second quarter was San Diego, which generated 365,687 sq. ft. of tech-office leases in the quarter for a 58 percent gain from its 2019 quarterly average.
The reverberations of the pandemic and recession on U.S. office leasing still are unfolding. So some impacts aren't yet fully apparent. The steepest rent declines so far have come in the downtowns of tech hubs San Francisco (down 5 percent) and Seattle (down 4 percent).