US Office Market Dynamics - Q2 2024

An uptick in large transactions drove Q2 leasing volume to its highest level since the onset of the pandemic. While activity is improving and rightsizing is moderating, roughly 60% of office leases that are currently active were signed before the pandemic and may be subject to future downsizing, which is likely to delay any future occupancy gains. Demolitions and conversions once again exceeded new deliveries in Q2, and overall U.S. office inventory declined for the second consecutive quarter. As functionally obsolete stock is gradually removed from inventory or substantially renovated, and tenants continue to exhibit more confidence in cementing long-term space plans, the remainder of the year is expected to see a continuation of in-place trends, with activity accelerating in the capital markets as interest rate cuts become a more realistic near-term prospect.