The tech industry’s share of U.S. office leasing fell in the first half of 2022 to its lowest share in five years, but the industry is still a formidable force in the office market, according to a new CBRE report. The annual report measures the tech industry’s impact on office demand and rents in the 30 top tech markets in the U.S. and Canada, along with a few tech-heavy submarkets.
Even with the recent decline, the tech industry accounted for 16 percent of total office leasing activity in the U.S. in 2022’s first half. That tied the industry with two other sectors, finance & insurance, and professional & business services, for the largest share of U.S. office leasing. Despite the pullback in tech office leasing, CBRE’s report found that over the past two years, more than two-thirds of the top 30 North American tech markets had office-rent growth. Seven of those markets saw tech office rents grow by double-digit percentages.
As tech industry layoffs proliferate, many expect the industry to continue slowing its office leasing activity. For example, Meta executives said during its third-quarter earnings call they expect to lose roughly $2 billion from its reduction in office leases for the remainder of this year. Other big tech companies such as Lyft and Yelp are also reducing office space and leases as the economy appears headed for a recession. Once economic growth picks back up, CBRE expects pent-up demand in the tech sector for office space and clearer hybrid work policies to return the industry to its prominent position in leasing space at a strong clip.