People Moved During Pandemic, But Businesses Didn't Abandon CBDs

People may have moved during the pandemic, but businesses largely stayed put, according to a new analysis from Cushman & Wakefield. 

Typically, C&W experts say, gateway cities are on the leading edge of recessions, with office fundamentals declining but recovering more quickly than the rest of the country. And historically, the gateway cities of Boston, Chicago, LA, New York, San Francisco, and Washington, D.C. have accounted for 44% of all office leasing in the US.  In 2020, that number went to 41.5%, a percentage C&W says is still within normal range.

In the first quarter of this year, though, the market share for those six gateway cities increased to 43.4% of total leasing, which Cushman economists say could be an early sign of recovery. What’s more, those markets saw an improvement of 50% quarter-over-quarter, with Chicago leading the way with a 101% increase and Manhattan following behind at +68%.

The data is similar in CBDs, which remains a “desirable location for occupiers attracting and retaining knowledge economy talent,” the report notes.  CBD leasing decreased during the pandemic, but that is likely because CBDs were more impacted by COVID-19 than surrounding suburbs.  Currently, CBD leasing’s market share is about 39.3%, in line with past numbers.

“The data does not support a mass exodus of companies from urban cores and city centers,” the report says.

California continues to lead the charge for corporate HQs, followed by Texas, New York, and Illinois. Between 2019 and the first quarter of this year, 78 large companies announced HQ moves, with more than half of these leaving California and the most common destination being Texas. Many of those moves, Cushman experts say, will have more of an impact on corporate governance than a large-scale shift of jobs.

“Most companies are moving to markets where they already have a presence and are planning to expand or build to fit the new HQ requirements,” the report notes.