According to the Office Space Demand Forecast by NAIOP Research Foundation, negative absorption of office space is expected to continue through 2024 and 2025. However, the rate of negative absorption is predicted to slow down significantly in the second half of 2025.
The report states that national office net absorption was at a negative 13.4 million square feet in the first quarter of 2024, worse than previously forecasted. This could be attributed to firms pausing their expansion plans due to a reversal in economic optimism towards late-2023 and elevated interest rates affecting corporate earnings.
Based on these trends and potential recession in 2024, it is estimated that net office space absorption will be at a negative value of around 11.8 million square feet for the last three quarters of that year. Looking ahead into 2025, it is projected that net absorption will reach approximately -4.5 million square feet.
NAIOP also notes that once there’s sustained growth and lower inflation in the economy again, demand for office spaces should increase as firms need more room for their operations’ growth. However, this may not happen until at least early-2025 instead o
