After a tumultuous year in 2020 due to the pandemic, the office sector is seeing a stable comeback.
A recent report from Commercial Edge found that the office space listing rate is up 1.1% year over year in major markets across the U.S. and the vacancy rate remained the same month to month at 15.6%. The average cost per square foot to rent was $38.60 in June, down six cents from May, but remaining stable.
However, we may be seeing a higher demand in the coming months.
The report found that office-using employment sectors of the economy increased 5.1% compared to June 2020. But there are still less office jobs than pre-pandemic by about 886,000. If jobs continue to be added at this pace (65,000 jobs per month), it is expected that we will return to pre-pandemic numbers and possibly more by August 2022.
Commercial builders are busy, as there is currently 160.7 million square feet of offices being built, with 85 million anticipated to be finished by the close of 2021. The report said specifically that labs are in high demand, thanks to mRNA research. Life science industries, like biomedical and pharmaceutical, are expected to continue to increase office demand as the year progresses and will aid in the drop of vacancy rates. Sales of offices have also been strong, with more than $30 billion occurring in the first half of 2021 at record levels, an average of $238 per square foot.
Specifically, in Philadelphia, vacancies were below the national rate at 13.4%, as was the cost per square foot, at $29.97.