WASHINGTON, D.C. – A demand forecast by the NAIOP Research Foundation is projecting a strong resurgence of the U.S. office commercial real estate market through 2023.
As the unemployment rate declines, more workers return to the office and the economy continues to improve, the office space net absorption forecast has been revised upward from 1.8 million square feet to 8.3 million square feet in Q4 2021. The total net absorption in 2022 is forecast to be 53.5 million square feet with a quarterly average of 13.4 million square feet. In 2023, the projected net absorption is 34.3 million square feet during the first three quarters, with a quarterly average of 11.4 million square feet.
This forecast is dependent on continued economic growth, which seems plausible given recent data. The measured unemployment rate in September was 4.8%, down from 6.1% in April. Supply chain issues have resulted in higher consumer prices and stoked inflationary concerns. Still, real Gross Domestic Product (GDP) rose at an annualized rate of 2.0% in Q3 2021, a pace that cooled from the Q2 2021 real GDP growth rate of 6.7%
According to the report, “although the number of people currently employed in professional and business services, financial activities and information industries is only 1.5% lower than in February 2020, office utilization rates remain much lower than before the pandemic due to continued concerns about coronavirus transmission. Click to read more at www.naiop.org.