U.S. office leasing activity ticked up in the first quarter after dropping in the second half of 2022, powered by a tenant preference for smaller spaces.
Office leasing totaled 96.7 million square feet, up from 91.3 million in the fourth quarter, according to CoStar data.
First-quarter leasing was still well below the typical showing in the years leading up to the pandemic, said Phil Mobley, CoStar's national director of U.S. office analytics.
And the average office lease size shrank in the first quarter to 3,179 square feet, according to CoStar data. That’s the fourth-smallest quarterly average size in 17 years, rivaling the size of leases in the early days of the pandemic.
Mobley said the recent trend “would seem to indicate that businesses are watching costs and slowing activity as the economy slows.”