Market Trends of North America Flexible Office Industry
Increase in Office Space Vacancy Rate
In the United States, vacancy rates across the office sector increased to an average of 12.4 percent in the third quarter of 2021. The jump in 2020 is primarily due to the impact of the coronavirus. The COVID-19 pandemic has changed the way that companies operate, and working from home has become the new normal for many employees in the United States. For teams that have returned to the office, employees are being encouraged to stagger start times and alternate their work schedules.
Over a year and a half after the beginning of the coronavirus (COVID-19) pandemic, the office real estate leasing market in the United States is suffering the consequences. As of the second quarter of 2021, all major office markets across the country saw negative office space absorption. In Los Angeles office space absorption measured negative 34,700 square feet, while in Manhattan it was over 3.2 million square feet. Due to the outbreak of the COVID-19 pandemic, employees and employers are preferring work from home option as well as flexible working hours. This statistic shows the vacancy rate in large office metropolitan areas in the United States in the second quarter of 2021. Dallas, Texas had the highest vacancy rate at 28.8 percent.
Increase in Office Space Construction
The pandemic-induced downturn that some feared would severely impact the flexible office space sector has instead landed flex space a prime role in future office strategies. The growing significance of digital systems & the need for completing knowledge-intensive tasks has transformed into a surging desire among employees to work from the office or from the desired location in an independent way. This has offered firms a chance to utilize their office space more proficiently, reduce traveling hours of employees, and increase employee satisfaction, thereby boosting their work efficiency and productivity.
The supply of new office space varied greatly among selected metropolitan areas in the United States in the second quarter of 2021. Manhattan, New York, was the leading metropolitan area with the most office space under construction of about 22.9 million square feet. San Francisco Bay Area ranked second with over 5.8 million square feet under construction which was only about 25 percent of the new supply in Manhattan. During the same period, the absorption rates for office space in these metropolitan areas were negative. In the second quarter of 2021, the Northeast region had the most office space under construction in the United States. There were over 33.2 million square feet of office space under construction in the Northeast region at the time. The Midwest had the least amount of new office space under construction of about eight million square feet.
