Snapshots
Downsizing activity reaches lowest level since pandemic onset in Q4
January 15, 2025
Contributors:
- Jacob Rowden
- While larger tenants facing a lease expiration are still trimming their footprints, rates of downsizing have fallen more than 50% from peak levels and are improving rapidly.
- In 2024, tenants over 25,000 s.f. who acted upon a lease expiration cut their footprints by 7.9% on average, the most substantial YoY improvement in this metric since the pandemic began.
- Q4 saw the lowest downsizing rate to date, with expiring tenants associated with just over 200,000 s.f. in footprint reduction on nearly 7 million s.f. of leases.
- 63% of large tenants who had expiring leases in 2024 either maintained their footprint or expanded, the largest share in recent years. The largest expansions in Q4 spanned several industries: Blue Owl Capital added 76,000 s.f. to their footprint in New York, Alarm.com added over 50,000 s.f. in Washington, DC, and the FDIC added more than 45,000 s.f. of space in Dallas.
- As downsizing activity is slowing, engines for growth within the office market are becoming more impactful, leading to the first quarter of positive net absorption since 2021, and just the second quarter of occupancy gain since the onset of the pandemic, with 276,400 s.f. of net absorption in Q4.
