Finance, Insurance Industries Dominate Major Leases Amid Tech Slowdown

Which industry accounts for the largest share of office leasing in the U.S. is an important metric to keep an eye on. Over the past few years, the pandemic has caused some big shifts in the way companies lease space. For the tech industry, which has been at the top of the heap in recent years in terms of the largest leases by square footage, last year was a rough one. In 2022, there was a major drop in tech leasing, shifting the industry rankings. Other industries that have a major presence in the office market, like the finance and insurance industries, life sciences, and legal, have been experiencing ebbs and flows as well over the past several months. To see which industries have the most share of the top leases, we compared data over the last two years in five sectors: finance and insurance, tech, creative industries, life sciences, and the legal industry.

Industry Sector Top 100 Leases Sq. Ft. 2022 Top 100 Leases Sq. Ft. 2021
Finance & Insurance 7.4 million sf 3.8 million sf
Tech 5.9 million sf 11.7 million sf
Creative Industries 2 million sf 1.7 million sf
Life Sciences 1.1 million sf 1.85 million sf
Legal 800,000 sf 1.7 million sf
Source: CBRE Q4 2022

In CBRE’s report on the top 100 leases from 2022, broken down by industry sector, we can get a sense of where things are for some of the largest occupiers of space. Tech has been the industry that’s probably gotten the most attention recently. Big tech firms like Meta, Google, and Facebook grab headlines with massive leases they tend to take in the country’s largest office markets. But last year saw a major change in tech leasing. Firms big and small instituted layoff rounds that have continued into 2023, slashed their office footprints, and in some cases, terminated entire leases altogether. Tech firms accounted for 17 of the top 100 office leases last year, down from 36 in 2021, something CBRE attributed to the impact of hybrid work. The days of the monster tech lease seem to be in the rearview mirror, at least for now, as the finance and insurance industry has taken the lead in the sectors with the most square footage leased out of the top 100 leases in 2022.

Companies in the financial and insurance industries accounted for 25 out of the top 100 office leases last year, more than doubling their share from 2021. Of those leases, 60 percent were new leases primarily in the Northeast. Law activity in 2022 reached a record high, a significant rebound for an industry that saw a marked slowdown during the pandemic. CBRE numbers show that the legal industry leased about 800,000 square feet among the top 100 leases in 2022. Overall, law firms leased a total of 14.6 million square feet in 2022, rising from less than 11 million square feet in both 2020 and 2021, according to data from Cushman & Wakefield. So far in 2023, law firms seem to be cutting back their office footprints. In the first quarter of this year, two of the largest law firm leases signed involved big firms shrinking their headquarters in major markets, according to Savills.

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The data here can quickly show which industries account for some of the largest office leases in the country, but more context is needed to understand the whole picture, like vacancy rates and individual market comparisons. It’s also worth noting that as these are the top leases, there are a lot of smaller leases unaccounted for in the data. CBRE is the largest brokerage firm in the world, and, along with rival firms around the same size, it tends to exclusively handle leases with the largest square footage. The national office market experienced an overall slowdown in the first quarter of this year, with vacancy rising at a faster pace and sublease space hitting record highs. Given the ongoing layoffs and downsizing in the tech sector, it wouldn’t be surprising to see tech fall in the top lease rankings again this year. One of the biggest factors that could influence leasing numbers by industry throughout the rest of the year is how return-to-office plans go. Stricter mandates on in-person work continue to be rolled out by companies this year, and depending on how widespread they are, it could have an effect on leasing figures.

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Mike McNamara

Mike McNamara

A Las Vegas Realtor since 2008. Mike has a wide range of knowledge around all things Las Vegas.

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