The tech sector is still correcting from the pandemic highs of 2021, and office markets across the country continue to feel the impact.
Approximately 9 million square feet of tech office space was leased nationally in 2023, down from 16.6 million square feet in 2022 and 22.6 million square feet in 2021, according to a new report from Savills.
One piece of good news, however, is that of the leases that were completed in 2023, nearly 43% were signed in the fourth quarter as the sector could be poised for a rebound in 2024.
"An uptick in [venture capital] funding could fuel innovation and expansion, necessitating office space for startups that believe in-person work will enable them to create groundbreaking technologies, raise funding and reach go-to-market milestones more efficiently than working remotely," the report said.
Tech layoffs were down more than 60% in 2023 compared with the highs of 2022. Layoffs were at their highest in Q4 2022.
More than 8 million square feet of tech office space was leased in Q4 2021, at the height of the pandemic boom, along with more than $90 billion in capital funding raised. In Q4 2023, that number dropped to around 3.9 million square feet of tech office space leased with $36.5 billion raised in capital funding.
In Chicago, Q4 2023 saw quarterly leasing increase to 2 million square feet, but available sublease space also increased as the market was hurt by more tech companies downsizing their office space, highlighted by Groupon slashing 90% of its footprint. The market's nearly 8 million square feet of available sublease space accounts for a 5.3% sublet availability rate — well above its two-year pre-Covid average rate of 2.9%.
The tech sector made up 37% of sublet space in Chicago compared to an average of 43.4% across Savills' top tech hubs.
Chicago tech jobs also took a dip in 2023, down 8.6% year-over-year.
