Tech Office Markets Take A Beating From Pandemic, But Chicago Avoids The Worst

Bisnow/Brian Rogal
Chicago's Millennium Park

The coronavirus pandemic began slamming all U.S. office markets in March, but so far, tech-heavy cities like San Francisco have fared the worst, while those with more diversified employment bases, including Chicago and Dallas, have seen fewer losses, according to a new report from CBRE.

The economic shutdowns in March led companies in the 10 largest U.S. office markets to increase the amount of office space offered for sublease by 12%, CBRE found. In June, the space for sublease nationwide totaled 59M SF, a jump of 6.1M SF over the previous three months.

Tech-heavy San Francisco and Denver led the way with increases of 33%, the study shows, while Boston, another tech center, had 5.5M SF for sublease, an 18% increase since March.

Chicago in June had 5.6M SF for sublease, landing it in the middle of the pack with an 8% increase.

“Space offered for sublease is a highly fluid and difficult-to-track metric since companies can put space on the market or withdraw it on a daily basis,” CBRE Americas Head of Office Research Ian Anderson said. “But the general increase in space offered for sublease amid the pandemic is to be expected. We believe that the second quarter was the low point for the market with office leasing activity down by more than 40% from a year earlier — and that we’ll begin to see a gradual recovery.”

Houston fared the best, even with its heavy dependence on the energy sector. The amount of space for sublease actually fell to 5.3M SF, a 2% decline. CBRE attributes this partly to its diversifying economy, which now includes many healthcare and tech tenants.

Dallas saw a 4% increase, and the Manhattan office market also did well. Its 11.2M SF offered for sublease in June was just 2% more than in March.

Continue reading this story with a free account

Log in or register
Sign up for more articles like this
Subscribe to Bisnow's Chicago Newsletters
Related Stories

NYC Pushes To Use Opportunity Zone 2.0 For Mamdani's Housing Goals

Defense Tech Firms Setting Up Shop In Trump Family's Palm Beach Orbit

McKinney Approves $21M In Funding For Cannon Beach Surf Resort

Google Delays Thompson Center Opening To 2028, Releases New Renderings

Where Capital Meets Opportunity: Navigating The Next Wave Of CRE Financing At Bisnow’s Event On Sept. 30

Discussing Strategic Capital Stack Structuring At Bisnow's Sept. 30 National Finance Event

Why Top-Secret Facilities Are Permeating Greater D.C.'s Office Market

With Occupancy Brimming, Investors Pile Into Bay Area Apartments

DivcoWest Sells Glendale Office Building For $70M

Bally's Lines Up $560M Loan For Bronx Casino: The N.Y. Deal Sheet

Data Center Spills 5,000 Gallons Of Fuel Into New Jersey River

California Investor Scoops Up Amazon Warehouse: The Chicago Deal Sheet