The CBRE Pulse of U.S. office demand showed modest improvement in October with a notable uptick in new leasing requirements, while leasing activity and sublease availability held relatively steady. To gauge the pace of recovery, CBRE has created 3 indices for the 12 largest U.S. office markets — Atlanta, Boston, Chicago, Dallas/Fort Worth, Denver, Houston, Los Angeles, Manhattan, Philadelphia, San Francisco City, Seattle and Washington, D.C. Using CBRE data, these indices measure office market activity each month and provide early indications of when and where momentum in office demand may be shifting. These metrics — space requirements of active tenants in the market (TIM), leasing activity and sublease availability – give a clear picture of office demand amid the COVID-19 pandemic.
The U.S. Tenants in the Market (TIM) Index increased 4 points in October to a level of 86, erasing its drop this summer from the resurgence in COVID infections. The U.S. Leasing Activity Index fell 1 point to a level of 95. Six markets saw improvement month over month, while the other six had either no change or a decrease. The biggest challenge remains the surplus of sublease space, with the U.S. Sublease Availability Index increasing 1 point to a level of 195 – a modest reversal after a slow but steady improvement since the index peaked at 207 in June.
Office-using employment growth is traditionally a harbinger of future leasing activity. Recent strong job growth suggests future momentum for the office market, particularly as consumer and business confidence increases. Barring another COVID resurgence, the office market appears on increasingly firmer footing heading into 2022.