U.S. national office market fundamentals soften, but public health conditions improve

The U.S. office market continued to weather the challenges created by the COVID-19 pandemic in second quarter 2021, according to Newmark.

Significant progress was made with respect to vaccine distribution and the slowing of viral transmission, which has allowed the removal of many business and occupancy restrictions nationwide. Still, office market fundamentals are under pressure. An extended period of low leasing activity has contributed to steady occupancy losses, with net absorption measuring negative 21.9 million square feet in the second quarter. The vacancy rate recorded 16.4 percent, an increase of 63 basis points from the prior quarter and 314 basis points over the past year.

More than 11.5 million square feet of new construction delivered during the second quarter. An additional 86.0 million square feet is still under construction, the smallest active pipeline since fourth quarter 2018. Asking rents continued to increase since the pandemic began; however, the