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Jacob Rowden, senior manager for U.S. office research at JLL, was a guest on the latest episode of Nareit’s REIT Report podcast. He noted that within the last year, a top-down recovery has been evident in the office sector that is now beginning to spill over more broadly.
Rowden noted that factors supporting a more positive direction for the sector include employees spending more time in the office, a lack of new construction, and a record volume of office inventory being removed for conversions or redevelopments to other property types.
“That's really started to change the supply side of the equation and push us into an environment where overall office inventory is starting to decline, which is helping us to reach this important inflection point overall, where now availability rates are starting to decline… that's something that hasn't been true for about five years now,” Rowden said.
Supply constraints mean that “very concentrated activity in the high-end segment is starting to spill over more broadly…to the next best available supply on the market,” Rowden said.
During the interview, Rowden also discussed leasing activity across industries including technology, financial services, and legal. He noted that financial service firms have mostly stabilized their footprints and are now entering expansion mode in a lot of markets, especially Sunbelt markets and New York City, which has been very active in the past year.
Law firms, meanwhile, have actually been exceeding traditional pre-pandemic leasing activity levels during the past year and are expanding their footprints in many markets, he noted.