Construction of the new office in Business Building Window at night
Fangxianuo | E+ | Getty pictures
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After a slow improvement in demand for office space in the first part of this year, April brought with it a significant contraction. Customs can stand behind it.
In April, 17 of the 19 large office markets from VTS, a real estate software, analytics and consulting companies, demand pursued the demand compared to March. VTS measures the office demand by looking for everyone who starts an office trip or looking for office space. The river new tenant to the office market fell by 23%compared to March, and the total square meter number fell by 26%.
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It was a striking resemblance to the contraction from March to April 2023, which, according to VTS report, coordinated with the banking crisis, which was bound to the failures of Silicon Valley Bank, the Signature Bank and later First Republic Bank. From March to April 2023, demand decreased by 25% and the square materials decreased by 38%.
The office market later recovered in 2023 with initially strong demand, but followed in seizures and starts. That was not the case this time.
“To the extent to which the tariffs affect the capital markets, there is an immediate retreat reaction,” said Max Saia, Vice President for Investor Research at VTS. “We definitely saw a back bum in some markets, but it wasn't as immediate what we saw after the banking crisis.”
A separate report by JLL, who looked at the full second quarter of this year, showed that the demand for office leasing had dropped by 2% after six quarters of growth over the course of the year. And the Trump administration now increases some tariffs and warns of further coming.
For the first time since 2018 and probably for the first time in decades, more square meters will be removed from the US office market this year than is added by a recently published report by CBRE by new building.
The stock markets have recovered sharply since the first shock of the so -called tariffs on the day of liberation, but potential office workers are still hesitant. Beyond the tariffs, there are geopolitical stress, including the conflict between Iran and Israel. At home there are concerns about the economic effects of the budget law that was adopted at the beginning of this month about the congress – and a still unclear future for tariffs.
“Nobody knows that this element knows exactly what the future is doing and what will happen,” said Saia.