Construction of new office in business building window at night renewal
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After a slow improvement in the demand for office space in the first part of this year, April brought an important contraction. Tariffs may follow it.
In April, 17 of the 19 major office markets tracked by VTS, a real estate software, analytics and advisory firm, decreased demand compared to March. The VTS measures the demand of the office that counts anyone who starts an office tour or discovers the office space. The flow of new tenants in the office market fell to 23% from March, and the total square footage is being sought 26%.
According to the VTS report, it provoked a similar similarity for contractions from April to April to April from March 2023 to April, which matched with the banking crisis bound to the Silicon Valley Bank, Signature Bank and later the Forms bound to First Republic Bank’s failures. From March to April 2023, demand declined by 25% and the sought of square footage declined by 38%.
The office market was later bounced back in 2023, with the initial strong demand, but then fit and followed. This time this has not happened.
“To the extent that tariffs affect the capital market, immediate pullback response,” said Max Sia, vice president of investor research at VTS. “We certainly saw a reversal in some markets, but it was not as immediate as we saw the post banking crisis.”
A separate report from JLL Given the entire second quarter of this year, the demand for office lease was shown 2% below 2% of the year-by-year growth. And the Trump administration is now increasing some tariffs again and warning more.
For the first time since 2018, and for the first time in decades, more square footage will be removed from the US office market this year. Recent CBRE report.
Equity markets have strongly retaliated since the President’s initial shock. Donald TrumpThe so -called liberation day tariff, but the office tenants are still hesitant. Beyond the tariff, there are geopolitical tension, including conflict between Iran and Israel. At home, there is concern over the economic impact of the budget bill passing through the Congress earlier this month – and still a vague future for tariffs.
Siya said, “No element knows what the future is and what is going to happen.”
