NAIOP Research Foundation: Slow Rebound Expected Ahead for Office Space Demand

Originally published on December 15, 2023, by Marie Ruff for NAIOP.

The tale of the office market in 2023: it was neither the best of times nor the worst of times. This year has continued to be one of recalibration and reevaluation for office space usage across the U.S. While some companies have called employees back to the office full-time, others have embraced the transition to being fully remote and others are somewhere in between. But what does the data show about office usage now and what’s ahead? In a recent NAIOP webinar, the authors of the recent office space demand forecast published by the NAIOP Research Foundation explained their research findings.

The forecast’s authors – Hany Guirguis, Ph.D., professor, of economics and finance, Manhattan College, and Michael Seiler, DBA, visiting research scholar, Federal Housing Finance Agency; visiting professor (MIT); and J.E. Zollinger Professor of Real Estate & Finance, College of William & Mary – started off with a high-level look at the economy. The U.S. economy avoided a recession in 2023 and real gross domestic product (GDP) has now expanded for the fifth straight quarter. “It’s nothing to brag about but it’s not as bad as some of the doomsayers say,” Seiler said.

Seiler explained that the Federal Reserve’s continued efforts to quell inflation by raising interest rates have been effective but at the expense of economic growth. After peaking at 9.1% in 2022, the inflation rate has declined to 3.1% every year, according to the U.S. Bureau of Labor Statistics. And the national unemployment rate, currently at 3.9%, “has been trending in the right direction: quite low and quite stable,” Seiler said.

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