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Office sector will continue 'to languish' in 2023, market watchers predict - Phoenix Business Journal

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The U.S. office market still hasn't recovered since the pandemic forced office employees into remote work, a trend that remains strong even as a growing number of companies become more aggressive about getting employees back to the office.

Preliminary data from U.S. markets tracked by Savills PLC indicates about 46 million square feet of office leasing activity occurred in Q4 2022, or about 20% below leasing activity observed in Q4 2019, before the Covid-19 pandemic, saidThat's also below office leasing activity observed a year prior, when 60 million square feet of office leasing activity took place in Q4 2021 across markets tracked by Savills.

And while a more pessimistic economy could mean employers will wrest some control away from employees that've had leverage amid a historically tight labor market, it's going to be hard to put the genie back in the bottle when it comes to remote work, Soto said., principal consultant at CoStar Group Inc.'s advisory services business, said she's expecting 2023 to be slow overall on the office leasing front, and vacancy rates will continue to rise across the U.S.

The remote work trend has continued to be sticky since the pandemic, even as concerns about the virus' spread waned, especially, in 2022.

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