Why the Right Office Space Is Becoming Harder to Find (despite conflicting headlines)

The office market is facing a paradox. While headlines focus on high vacancy rates, many companies searching for quality office space are finding it surprisingly difficult to secure the right location.

How can there be an office space shortage when so many buildings are empty?

The answer lies in the distinction between outdated, underutilized offices and modern, well-located workspaces that companies actually want.

The Growing Divide: Class A vs. Everything Else

Continuing the rise in demand for premium office space quarter over quarter in 2024, Class A office space accounted for 72.1% of the market's leasing activity by square footage in Q4 2024.

In a recent Business Insider report (October 2024), this growing divide is highlited, pointing out that while outdated office buildings struggle, developers are racing to meet demand for high-end office spaces in key markets.

In New York, some older office buildings have vacancy rates exceeding 25%, while newly built or renovated spaces in Midtown are nearly fully leased.

In Atlanta, the same pattern is emerging—companies are consolidating into high-end office towers with better amenities, leaving older buildings under pressure.

South Florida’s market is even tighter, with companies relocating from New York and California, driving demand for premium office space.

For CFOs, HR leaders, and real estate decision-makers, this trend presents a challenge as securing high-quality space is becoming more competitive, even as weaker buildings remain empty.

AIG's 178,666-square-foot lease at 2002 Summit Boulevard represented by Gregg Metcalf and team

Case Study available upon request: email gregg.metcalf@jll.com

Why Premium Office Space Is Scarce

Several factors are driving the supply-demand imbalance for top-tier office spaces:

Flight to Quality:
Companies are prioritizing modern, amenity-rich offices in locations that help attract and retain talent.

Limited New Construction:
Rising construction costs and economic uncertainty have slowed new office developments, further tightening supply.

Hybrid Work Realities: While some companies have reduced their footprint, they’re upgrading to better spaces that support new workplace strategies.

Conversion Challenges: Converting older office buildings into new office buildings isn’t as simple as it sounds. Instead, they’re being redeveloped into alternative uses inclusive of residential, mixed use, retail, and even in some cases industrial, further constraining office supply.

What This Means for Tenants

For businesses that will need new office space in the next few years, this trend has real implications:

Rental Rates for Premium Spaces Will Likely Rise—

With high demand and limited supply, landlords of the best buildings have the upper hand.

Leasing Competition Will Increase—

Top-tier spaces are being snapped up faster, meaning tenants need to plan ahead.

Negotiation Strategies Matter More Than Ever—

Securing favorable lease terms in this environment requires a strategic approach.

In a market where premium office space is becoming scarce and competition fierce, having the right strategy can mean the difference between securing the ideal office space (design, lease, and location) and settling for less, which can be costly.

How to Stay Ahead

If your company is considering relocating, restructuring, or renegotiating a lease, now is the time to act. Procrastinating could mean fewer options and higher costs.

Conduct a Needs Analysis to align your real estate strategy with your business objectives.

Secure and Optimize Office Location(s), Space(s), and Lease(s).

Maximize Profitability, Recruitment, and Retention

Take the Next Step

Many companies lose millions of dollars due to lack of employee engagement, loss of top talent, and inefficient or unneeded office space.

Working with me, clients gain the insights, the analysis, and the plan to obtain the lease and office space that retains the best employees, attracts top talent, and maximizes profitability.

To Contact Gregg Metcalf:

email: gregg.metcalf@jll.com

mobile: 404.661.9284

Noteworthy transactions in 2024

AIG's 178,666-square-foot lease at 2002 Summit Boulevard

represented by Gregg Metcalf and team

Deloitte's 115,000-square-foot lease at Promenade Tower
represented by Gregg Metcalf and team.

These, among multiple others represented by Gregg Metcalf and team, reflect a broader trend of large firms consolidating operations and expanding their footprints in the Atlanta market.