Better late than never. Office leasing activity has surged at the end of the year, accounting for 50% of the year’s office leases.
There may be a little holiday hope for the office market. From September through November, office leasing activity rebounded. The activity has accounted for 50% of the total office leasing volume this year, according to data from ZoomInfo. The reason: corporate office expansions.
Corporate users have continued to expand office footprints this year, generating office leasing activity in September, October and November. According to ZoomInfo data, 539 office-using companies have expanded in 2020. Amazon is among the biggest drivers of the growth. This year, the tech giant has expanded its physical office space in six tech hubs, adding 3,500 new jobs to the market.
Unexpectedly, work-from-home strategies also contributed to corporate expansion and new office leasing. Many companies have seen remote work as an opportunity to exit expensive urban markets without losing employees or leaving important job centers and access to labor. Several companies made the announcement to move this year, including Oracle and Hewlett Packard Enterprise, both of which are moving from Silicon Valley to markets in Texas.
They aren’t alone. ZoomInfo data puts Texas and Florida as the top markets for companies relocating. Of the companies moving to new markets, 9% are making the move to Texas and around 8% are heading to Florida.
Expansion is a good sign for not only office leasing activity but also for the health of companies and economic stability. Companies are expanding for an assortment of reasons, but the top three include capturing market share (49.7%), expanding sales presence (44.8%) and diversifying investments (30.9%).
Global corporate expansion is also increasing. A report at the half-year mark from consulting firm Globalization Partners and CFO Research found that 45% of companies are currently expanding globally or plan to expand within one year. Another 50% of respondents in the survey expressed interest in expanding or adding operations in the Asia-Pacific region.
Brokerage firm Newmark has also been closely following office-using corporate activity this year. In an earlier report, the firm suggested that trends among office-using companies could be an indicator of future office demand. Good news came in the third quarter when 30% of the private sector office-using jobs lost in second quarter were recovered. The 15 largest office markets in the country—many of which have been the hardest hit by the pandemic-driven downturn—have seen the strongest recovery in office-using jobs, including Seattle and Dallas.
Source: “Office Leasing Activity Rebounds at Year’s End“