According to the NAIOP Research Foundation’s Office Space Demand Forecast, 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 by the second half of 2025.
The report states that in the first quarter of 2024, national office net absorption was a negative 13.4 million square feet, 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 projected that net office space absorption will be around negative11.8 million square feet for the last three quarters of that year. Looking ahead into 2025, it is estimated that there will be approximately negative four point five million square feet of net absorption.
NAIOP notes that once there is sustained economic growth and lower inflation rates again post-pandemic , demand for office spaces should increase as firms need more space for their operations . However , this scenario may not occur until at least mid-2025 .
Marc Selvitelli , CAE , President & CEO at NAIOP stated “Despite overall positive sentiment within commercial real estate industry we are still looking towards improvement into mid-2
