Q2-2020 N-680 Office Report

Q2-2020 N-680 Office Report

July 17, 2020 Off By Chris

As we finalize our Q2 market reports I wanted to give a preview of what we’re seeing in the N-680 market. The full write up of the report is below and I will attach a copy of the report to the post once it is finalized. If you want to see the whole report or see another geographical area, you can email me or check back in a few days to see if it is posted. Here’s the write up for the N-680 Office Report…

The second quarter office market closed with a couple interesting stories. As we close out June 2020, we are closing out 4 months of Stay in Place and the bulk of the office market working from home. We closed the first quarter with a vacancy rate of 14.6% which turned into 15.3% in the second quarter. That change represents a 70 basis point change over 3 months which is above the 20-40 basis point change we usually see.

In our index, the first quarter closed with an average market asking rent for Class A/B properties in the North 680 market at $3.16 per square foot. The second quarter closed with a $.01 drop at $3.15 per square foot. While many expected the rents to drop during the stay in place order, the stats simply don’t show that happening. While asking rents are not the same as deal rents, the asking rents have not changed much since the Pandemic hit.

Our third story is around sublease rents. The average asking rents on a direct basis for Q2 are $3.42 per square foot but the average asking rents on sublease space are $2.27 per square foot. If you’re goal is to find a bargain in this market, that can likely be found on the sublease market. Prior to signing a sublease, you’ll want to talk to your broker to make sure you understand the risks.

Our last story is focused on the amount of sublease space on the market. The sublease inventory has been steadily growing since the first quarter of 2019. In the first quarter of 2019, we tracked 216,635 sq. ft. of sublease space. At the close of the second quarter, we are now tracking almost twice as much space at 419,218 sq. ft.

If you need some guidance with your office lease, please don’t hesitate to give one of our brokers a call to discuss strategies that are best for your company. Alternatively, building owners can also call if they want to better understand where their property fits in this market and how to find a tenant sooner than later, we can do a custom market analysis for you. Either way, we look forward to hearing from you, our contact information is in the report.

If you’d like to connect, I can be reached at ccrabtree@lee-associates.com.