Office leasing at highest level since 2019

Global office leasing activity continued to increase in the final quarter of 2024 with volumes 10% higher over the quarter. This pushed full-year 2024 leasing up by 9% to the highest annual total since 2019. The U.S. saw the strongest growth with volumes 18% above 2023, as progress on office attendance policies and headcount growth provide occupiers with greater clarity on workplace planning and lead to moderated downsizing trends. Volumes in Asia Pacific rose by 5% in 2024, while activity in Europe was largely unchanged over the year despite a growing pipeline of requirements as deal processes continue to be prolonged.

The global vacancy rate increased by 10bps to 16.8% in Q4, with vacancy higher in Europe and North America but declining in Asia Pacific. New supply is set to fall during 2025 in Europe and North America, where new groundbreakings have fallen to their lowest level on record in the United States. This is expected to contribute to vacancy peaking and starting to decline in both regions over the next 12 months; with less new space coming to the market and availability concentrated in less desirable buildings and locations, competition for the best space will continue to intensify.

Future trends: Supply shortages for in-demand spaces and locations set to intensify in mature markets

Short-term: Office attendance mandates are increasing globally, and we expect these policies to continue shifting towards an average of four days per week. Combined with rising headcounts, many companies now have greater clarity on their workplace needs. As a result, more CRE leaders are anticipated to start executing on their strategies and making real estate decisions. Active tenant searches continue to increase in the U.S., while there has been a rise in large-scale requirements in Europe. In Asia Pacific, robust demand in higher-growth markets such as India and an elevated supply pipeline are supporting activity. This should enable a further improvement in leasing volumes during 2025. For organizations seeking new space, decisions made this year will need to have a degree of built-in flexibility to allow for future expansion in the years to come.

Long-term: Rising attendance levels means more space will be required: 57% of our global Future of Work survey respondents cited expansionary activity as a top expectation from 2025 through 2030. With limited availability of high-quality CBD space in many markets and less new construction in the U.S. and Europe, competition for the best space will continue to intensify. Companies need to affirm their strategy around the kind of space they are looking for and be proactive to secure it. Supply constraints in the top segment of the market are also likely to lead to a greater focus on redevelopment and retrofitting and stronger demand for emerging hot spots and next-tier assets.