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Press release

4 MAY 2022

Demand for prime US office space rises +24% from Q4 2021

  • Demand for offices and therefore their predicted rent returns rise in Q1 2022
  • Recovery in US commercial property gains pace – Commercial Real Estate (CRE) primed to drive levelling up and support communities in recovery across the US*
  • Twelve month expectations upbeat at the all-sector level

The start of 2022 saw a rise in new tenants looking to rent US commercial property, with the uplift particularly prevalent in prime office spaces.  Investor enquiries across all US commercial property also continued to rise, according to the RICS Commercial Property Monitor, Q1 2022.

Respondents to the survey saw a notable increase in US office demand in Q1 2022 with the net balance improving to +24% from a flat picture at the end of 2021. A considerable change in sentiment was also seen in the retail sector, as occupier demand has continually increased, reaching a +13% net balance in Q1 of 2022, a +7% increase from Q4 2021.

Looking at commercial property as a whole, for the first time since 2015 a net balance of +37% of respondents reported an increase in occupier demand at the all-sector level (retail, office and industrial uses). Investor enquiries also rose in the first part of 2022, with the strongest figure since Q4 2015 (net balance of +43%). Moreover, for the first time since 2018, investment enquiries are now in positive territory across each of the three traditional market sectors separately (office, industrial and retail).

Looking once again just at offices, investor demand rose from a net balance of +5% at the end of 2021 to +15% in Q1 2022, and the net balance of respondents predicting a rise in capital values for the office sector is the most positive since Q4 2019 (+24% net balance). With the jump in occupier demand for new office space, rents are expected to rise over the coming three months with a net balance of +15% expecting a rise, compared to +5% in the last quarter.

Tarrant Parsons, RICS Economist, said:

“The latest survey feedback points to demand from both occupiers and investors gaining momentum over the quarter, with the office sector in particular now showing signs of recovery.

“This has led to an upgrading in expectations for capital value and rental growth across prime offices, while the prolonged downward trend in portions of the retail sector also now appears to be easing.

“That said, given the current headwinds facing the global economy in form of sharply rising energy prices, higher interest rates and general cost of living pressures, there is understandably a lot of caution regarding the potential impact this could have on market conditions going forward.”

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