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3/06/23
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This report provided by CBRE
The finance and insurance industry supplanted the tech industry last year for the largest share of the top 100 office leases in the U.S., according to a new report from CBRE. Finance and insurance companies claimed 25 of the largest 100 U.S. office leases of 2022 by square footage, up from 12 in 2021.Tech companies accounted for 17 of the largest 100 leases, a decline of more than half from the 36 that tech notched in 2021.
Tech has long been the leader in U.S. office leasing; CBRE only started tracking the 100 largest office leases in 2020, but tech led in overall U.S. office-leasing activity from 2013 until last year. Finance and insurance leapfrogging tech in large leases underscores the tech industry’s pullback after years of strong growth before and during the pandemic. Meanwhile, finance and insurance has generally recorded higher office-attendance rates than tech, CBRE surveys show.
Los Angeles ranked among the top 10 markets for its share of square footage among last year’s largest 100 U.S. office leases, registering 1.2 msf across five megaleases in L.A. Nearly a third of that L.A. square footage went to finance and insurance companies.
“Tech had a massive year in 2021, so it’s no surprise the sector slowed in 2022. Finance and other related industries are navigating this new environment with a focus on collaboration and productivity, and getting people back together in the office is an important component of this strategy,” said Jeff Pion, Vice Chairman with CBRE and the firm’s leading broker in office leasing in Greater Los Angeles.
Nationally, other industries that expanded their share of the largest 100 leases last year, beyond finance and insurance, include business and professional services (eight leases in 2022), retail trade (seven), energy (five), manufacturing and transportation (five), and creative industries (five). Those that registered fewer of the top leases in 2022 than in 2021, in addition to tech, include government and nonprofits (nine), life sciences (four) and legal (four). Los Angeles was the only market to register a new lease by the creative industry among the largest 100, that being a 400k sf transaction in West L.A.
“The inclusion of a wide range of industries among the largest 100 office leases shows that the office remains a cornerstone of hybrid work for many professions,” said Whitley Collins, CBRE Global President of Occupier Advisory & Transaction Services. “The probability of a recession will slow leasing in the short term. But, in the longer term, the need to provide offices that support the future of work will continue to drive leasing activity.”
In Los Angeles, office leasing spanned a diversity of industries last year. In terms of the metro’s overall office leasing activity, no single industry accounted for more than 18% of activity by square footage. Five industries accounted for at least 10% each in leasing.
By region, the Northeast accounted for most (31%) of the largest leases, followed by the Pacific states (21%). On the metro level, Manhattan, Northern Virginia and Silicon Valley led with the most square footage among their leases in the largest 100. Manhattan, in particular, benefited from its standing as a finance capital; Seven of Manhattan’s 18 big leases went to finance and insurance companies.
Markets With Largest of the Large Office Leases of 2022
Market -- # of Top Leases -- Square Footage
• Manhattan – 18 -- 5.5M
• Washington, DC – 4 -- 1.6M
• Northern Virginia – 6 -- 2.5M
• Houston – 6 -- 1.5M
• Silicon Valley – 6 -- 2.2M
• Atlanta -- 6 -- 1.4M
• Dallas/Fort Worth – 5 -- 1.9M
• Los Angeles – 5 -- 1.2M
• Chicago – 8 -- 1.8M
• Boston – 4 --1.2M
The percentage of the largest 100 that were new leases declined to 53% in 2022 from 61% in 2021. That might be due to large companies avoiding the higher interest rates and construction costs of a move by instead staying put and renewing their expiring leases.
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