Occupiers continue to add sublease space to an already saturated market, and to downsize their occupancy requirement at lease expiration. Market participants, including investors, are now accepting as fact the new ways of using office space will result in less demand for their product. During the first couple of years of the pandemic, investors, enjoying record high levels of occupancy and strong cash flow, naturally chose to believe in a future narrative that included a rebound to 2019 demand levels. Their optimistic (if not realistic) outlook had them waking up in 2023 with 7m to 10m square feet of demand and 4% vacancy. But it’s now clear this is not how things are playing out.
