Suburban office markets are recovering faster than downtown markets across the U.S., according to new CBRE data. Downtown office buildings in most markets remain impacted by a slow return of residents and in-person workers who jumped ship at the start of the pandemic. Data shows the average suburban office asking rent increased 0.7 percent quarter-over-quarter in the first quarter of 2022, while the downtown average rose just 0.3 percent.
Overall, downtown office vacancy rates have spiked by 6.2 percent since the first quarter of 2020, while suburban office vacancy rates have seen a smaller increase (3.6 percent). CBRE says the suburban vacancy rate of 16.9 percent is 20 basis points lower than its pandemic-era high, while the downtown rate of 16.8 percent is the highest it has been in the past two decades. The 10-basis-point gap between downtown and suburban vacancy rates is the narrowest it has been in more than 20 years.
Throughout the pandemic, there has been much discussion on the potential increase in the popularity of suburban offices. This new data shows some of this popularity is coming to fruition. Several factors could be causing this, including shorter commutes to suburban offices and the preference for more living space. Only time will tell if the suburban office continues to emerge as a favorite among occupiers, so it’s something landlords and investors will undoubtedly be keeping an eye on.