Colliers International Sees Sharp Increase in Office Vacancies

The coronavirus has forced Colliers International to make “adjustments” that counterbalance present and the future negative trends that the coronavirus pandemic has had on its national office markets.

Before the coronavirus, leading housing markets in the US showed signs of cooling in the first quarter of 2020. While rents saw minimal changes, once the coronavirus led to stay-at-home orders and social distancing restrictions, market vacancies and lower absorption have increased. According to the Colliers Q1 2020 Top Office Markets Snapshot Report, absorption was negative in four markets and felt in two more.

The report attributed Covid-19 to slowing leasing activity in March. It placed blame on the coronavirus for the creation of a “climate of uncertainty” that will put decision making on hold as businesses reevaluate their real estate needs and seek to contain costs.

The coronavirus pandemic will impact all of its markets. But those, such as Silicon Valley and Seattle, which have tech-led markets and established firms with strong balance sheets, will be the most resilient. Meanwhile, the collapse of oil prices will sharply impact Houston and coronavirus pandemic will test the entertainment sector in Los Angeles as production has come to a close.

Also from Colliers’ top 10 nationwide office markets, Manhattan is experiencing a slowdown in first-quarter leasing activity. Washington, DC, has elevated vacancy. In Chicago, large-block availability “is a heightened concern.” Dallas has seen a slowdown in construction activity. Boston has a mixed first-quarter with net absorption negative, but with rents continuing its rise.

Atlanta had the strongest quarter in 20 years. According to the Colliers Q1 snapshot report, net absorption was the highest among the 10 top office markets, driven by long-planned move-ins at 1.4 million square feet.