Office leasing jumped in the second quarter, rising well above long-term norms and hinting at fresh momentum in a sector still working through hybrid work and high vacancies. A new report from Colliers said leasing volumes were 31.3% higher than the 10-year average, signaling an active season for tenants and landlords.
The surge arrives after years of strain on downtowns, property owners, and local tax bases. It suggests companies are making decisions they had delayed, while also reshaping how much space they need and where they want it.
“During the second quarter, office leasing volumes were 31.3% above the 10-year average, according to a new report from Colliers.”
Why Activity Is Picking Up
Leasing volume measures the square footage signed, not how many people are back at desks. Even so, a jump of this size signals that corporate real estate teams are no longer on pause. Many firms are renewing, resizing, or swapping addresses to match hybrid schedules.
- Lease expirations stacked up after pandemic delays, pushing more deals into 2024.
- Landlords offered larger concessions, including months of free rent and tenant improvement packages.
- Tenants traded up to newer buildings with better air systems, amenities, and transit access.
- Some companies reduced footprints, then took higher-quality space to support in-office days.
Brokers often describe this moment as a “flight to quality.” That means premium towers see the most interest, while older buildings struggle unless they are upgraded or discounted.
Not the Same as Full Recovery
High leasing volume does not guarantee that net demand is positive. When a tenant moves from one building to another, total occupied space may not rise. Many firms are still trimming square footage, even while signing fresh terms.
Vacancy rates in many cities remain elevated by past standards. Sublease space is plentiful. Flexible lease lengths and space-as-a-service options are common. These trends keep pressure on asking rents, even as owners use incentives to close deals.
In effect, the market is busy but still rebalancing. The mix of renewals, relocations, and right-sizing can lift reported volume while leaving overall occupancy flat or only modestly higher.
Regional Splits and Building Gaps
Conditions differ by city and by building type. Central business districts with strong transit, tech, and finance hubs often post stronger activity in top-tier towers. Sun Belt metros have drawn migrating firms and workers in recent years, while some coastal cores are still rebuilding weekday foot traffic.
Older, energy-inefficient offices face a steeper hill. Owners who invest in upgrades—ventilation, natural light, shared amenities—report better tour activity. Properties that do not modernize may need deep discounts or a new use, such as residential conversion, where zoning and economics allow.
What the Surge Means for Stakeholders
For landlords and lenders, higher deal flow offers breathing room but also a test of balance sheets. Free rent and build-out costs strain cash flow before leases ramp. The quality gap can widen borrowing costs for weaker assets.
Cities watch closely. More signed leases can support occupancy gains and stabilize tax revenues over time. But progress depends on how much space tenants actually use and how fast employees return on peak days.
For workers, upgraded offices aim to make commutes feel worthwhile. Better amenities, meeting spaces, and on-site services are common features in the newest leases. Many companies now schedule anchor days to coordinate teams and protect focus time.
What to Watch Next
The next few quarters will show whether this burst is a one-off or part of a steady turn. Key signals include sublease inventory, net absorption, effective rents after concessions, and the length of new leases. Construction pipelines have thinned, which could help well-located buildings regain pricing power if demand keeps rising.
For now, the message is simple: companies are signing again. That does not end the office reset, but it suggests decision-makers are moving from wait-and-see to act-and-adapt.
If leasing remains above trend, expect more owners to invest in upgrades, more flexible workspace to appear in Class A towers, and more scrutiny of struggling buildings. Watch for policy moves on office-to-residential conversions, which could reshape downtown blocks and help ease housing shortages.
The surge in activity is a clear step in the market’s next chapter. The direction of that story will hinge on how much space tenants keep—and how well buildings meet a changed workweek.
