Smaller deals dominated office leasing in 2020. The 100 largest deals accounted for 19% of total U.S. office leasing, on par with 2019 levels, but their total square footage (29 million) was down by 32%. The drop was in line with the 36% decline in overall U.S. office leasing due to a pullback in new tech and financial services leasing and smaller average lease sizes for most industries.

Renewals accounted for 43% of the top 100 leases, up from 33% in 2019, largely due to occupiers’ wait-and-see approach amid the COVID pandemic.

On a square footage basis, new leases among the top 100 deals were primarily by tech companies in Manhattan and Seattle.

Figure 1: Industry Breakdown of  Top 100 Leases

Note: Due to negligible activity, Telecomm, Coworking, and Other have been excluded.
Source: CBRE Research, January 2021.
Tech companies accounted for 18 of the top 100 leases and the most by square footage (6.8 million), largely in new leasing activity. Nevertheless, leasing by tech companies was down by more than half year-over-year, demonstrating a slowdown by even one of the most resilient industries. The government & non-profit sector also accounted for 18 of the top 100 leases and the second most by square footage (4.7 million), the overwhelming majority of which (87%) were renewals, primarily in Washington, D.C. Industries with a higher proportion of new leases were tech, life sciences, health care and aerospace & defense.
Most industries recorded a substantial drop in the average top lease size, ranging from -14% (energy) to -51% (creative). Only business services saw a modest increase (7%) in average lease size, while retail had no change. The average size of the top 100 leases fell by 32% to 290,000 sq. ft.

Figure 2: Top 10 Active Markets & New Lease Demand Drivers

Note: Top industries driving overall new leasing demand are highlighted. Source: CBRE Research, January 2021.

Manhattan and Washington, D.C. together accounted for nearly 40% of the top 100’s total square footage last year. Renewals accounted for most of the activity in these markets (65%). Seattle, Boston, Houston and Atlanta accounted for a combined 37% of all new activity in the top 100. Of the total leasing activity in these markets, 84% was in new leases and was primarily driven by the tech, life sciences and energy sectors.

2021 Outlook

As positive sentiment returns to the market from lower COVID-19 transmission rates and wider administering of vaccines, occupiers will begin to form long-term portfolio strategies. Improved office leasing activity in a more stable environment likely will begin in the second half of the year as workers return to the office and if economic growth continues.