Renewals Dominate List of Top 100 Office Leases
As for the flight to quality, 84% of new leases sought those accommodations.
Existing office leases are being renewed at high rates and new leases are mostly going to Class A or Class A+ space, according to a new report from CBRE that analyzes the top 100 lease signings in 2023.
CBRE’s report showed that 58% of those leases – by number and by square footage – were renewals of expiring leases for the same space.
As for the flight to quality, 84% of new leases sought those accommodations.
The average lease size is down 12% from a year ago and government buildings had the most presence on the list with 19, topping last year’s highest category, finance & insurance, which accounted for 13 of the top leases. Technology had 11 and legal had 10.
Mike Watts, CBRE President of Americas Investor Leasing, said in prepared remarks that companies “are striving for the most efficient use of their space as they adapt to hybrid work, and they’re often choosing to do so in the best-quality space.”
He said another dominant trend was “containing costs amid an uncertain economic outlook.”
The report also inferred that companies are wanting higher quality space in better locations to provide “additional motivation for employees to work from the office more often.”
The Northeast and Pacific regions accounted for most of the top 100 leases by total square footage, according to CBRE. Manhattan, Silicon Valley, and New Jersey had a combined share of 41%.
The six largest shares of the top 100 by square footage were claimed by coastal markets, including Manhattan.