Office Market Trends and Insights

Dec 6

Interest rates and stricter capital requirements have made new development challenging, with loans becoming harder to secure.

Work-from-home culture has reshaped the market, but hybrid models and flexibility are here to stay.
Companies are focusing on creating commute-worthy spaces, with investments in neighborhoods playing a pivotal role in attracting employees back to the office.
AI adoption is influencing office space requirements and design.

Stabilization and Resilience:

Leasing demand has been robust over the past year, marking the best leasing activity since 2014.
Vacancy rates have likely peaked, and sublease availability has declined as companies prepare for a partial return to office spaces.
The office market is evolving rather than declining, with fewer new constructions expected over the next 5–7 years
Trends and Preferences:
The market is seeing a "flight to quality," with demand concentrated on amenity-rich, premium offices.
Many suburban offices lack essential amenities, making them candidates for demolition or redevelopment.
The best amenity is often the neighborhood; investments in urban areas are critical for creating attractive work environments.

The Southeast is experiencing demographic growth twice the national average, with 50,000+ jobs migrating to the region since 2020.
Smaller companies are expanding their office footprints, particularly in mixed-use developments.
Raleigh’s steady growth highlights the power of incremental wins, with smaller expansions adding up significantly over time.
To meet the region's growing demand, it is essential to invest in multi-family housing, industrial spaces, and mixed-use developments.

Senior living demand is at an all-time high, with supply struggling to keep up.
Data centers are gaining traction as a valuable alternative investment.

You can read this blog post to see thoughts from Ted Klinck, the CEO of Highwoods Properties.

Jennifer Miller

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