Structural change in the U.S. office market after 2019: Evidence from lease-level data

Abstract

This paper examines how the leasing activities, contract features, and pricing of the Class A office leasing market have evolved since 2019 across five major U.S. markets: Los Angeles, the Bay Area, Dallas, Washington, D.C., and New York City. Using a granular dataset of 73,508 office leases from 2010 to 2024, we find a broad-based contraction in leasing volume and meaningful adjustments in contract features, including increased reliance on free rent and shifts in tenant-improvement usage. More importantly, we document structural changes in the determination of net effective rents at the lease level. In several major markets, longer leases, which were previously associated with rent discounts, began to command premiums after 2019, indicating a revaluation of contractual duration. We also find intensified spatial polarization and substantial reordering of tenant industry rent premiums, suggesting increased segmentation across geography and industry.