Commercial Real Estate News
Despite COVID, Tech Drove the U.S. Office Market in 2020
100 Largest Tech Leases in Seattle, Manhattan, Washington, D.C., Atlanta and Austin
According to a new report from CBRE, new office leases, rather than renewals, accounted for most of the largest U.S. office leases by technology companies last year, which helped to reaffirm tech as the most active industry in overall office leasing for a ninth consecutive year.
The tech industry retains that title despite registering a smaller share of U.S. office leasing last year (17 percent by square footage) than in 2019 (21 percent). All told, office leasing by tech companies amounted to 26 million sq. ft. last year.
CBRE's analysis of last year's 100 largest office leases by tech companies found that renewals accounted for 25 percent of the cumulative square footage of those big leases, up from 17.5 percent a year earlier. Granted, that's still a minority share, but the growth of that share reflects trends in the broader office market as more companies opt for renewals as they wait for the recovery - of the economy and public health - to play out.
"The tech industry has been rapidly expanding its real estate footprint for much of the past five years, and many leases signed in that recent timeframe have yet to come up for renewal," said Todd Husak, Managing Director of CBRE's Tech & Media Practice Group. "Therefore, renewals still aren't as prevalent as new leasing for tech companies."
Among leading markets for huge tech leases, Seattle claimed the top spot with 14 of the largest 100 for a total of 3.4 million sq. ft. That allowed Seattle to climb to the No. 1 spot from No. 3 in 2019. Manhattan remained in the No. 2 spot with 8 leases totaling 1.8 million sq. ft. in 2020. Washington, D.C., leapt to No. 3 from No. 6 a year earlier by virtue of 12 megaleases spanning 1.8 million sq. ft.
"Even amid the pandemic, tech has seen strong demand for many of its products and services," said Colin Yasukochi, Executive Director of CBRE's Tech Insights Center. "Within the largest 100 tech-office leases, most leases involved software, e-commerce and tech business services companies. Those are roughly consistent with the busiest sectors in 2019 tech-office leasing, though search companies were more active in the top 100 then than they were in 2020."
