2024 Office Vacancy Update

The national office vacancy rate in December saw a modest year-over-year increase of 1.5 percent when compared to December 2023, reflecting ongoing challenges in the sector, CommercialEdge data shows. Last month, office vacancy reached 19.8 percent.

The year-over-year vacancy changes underscore how geographic nuances continue to shape office market performance, with rising rates in tech-heavy and coastal markets standing in stark contrast to more stable conditions in the Sun Belt and select Midwestern cities.

Among individual markets, Austin recorded the sharpest rise, with a staggering 6.9 percent year-over-year increase, highlighting the market’s struggle to align rapid office development with evolving tenant requirements. Similarly, the Bay Area and Portland, Ore., reported a significant increase of 6.2 percent, reflecting pressure on tech-driven markets as hybrid work models persist.

On the East Coast, Philadelphia (5.2 percent) and Boston (5.1 percent) emerged as key hotspots for rising vacancies, illustrating the uphill recovery faced by urban core markets with high costs and extensive inventories. Among gateway markets, San Francisco (5.2 percent) continued to grapple with post-pandemic recovery.

Moderate, but steady vacancy increases

Meanwhile, several Sun Belt and Midwestern markets reported modest vacancy increases. Dallas-Fort Worth (3.8 percent), Atlanta (1.8 percent), Miami (1.1 percent), Nashville, Tenn., (0.9 percent), Chicago (0.7 percent) and Phoenix (0.4 percent) demonstrated resilience compared to their coastal counterparts.

At the same time, vacancy rates in Manhattan increased just slightly, with a 0.2 percent year-over-year bump. Notably, Denver (2.5 percent) and Tampa- St. Petersburg-Clearwater (3.0 percent) showed stable but rising vacancies, indicating balanced demand and supply dynamics.

—Posted on January 28, 2025

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As of September, office utilization remained unchanged and vacancy rates are continued to rise, marking a 1.7 percent year-over-year change on a national level. That month, the national vacancy rate stood at 19.5 percent.

Among the top markets in the U.S. where the office vacancy rate showed a big increase in comparison with last year’s data stands Austin—leading with a 6.6 percent year-over-year change—followed by Boston (6.1 percent), Denver (4.0 percent) and Seattle (3.9 percent).

On the other hand, office markets that showed improvements in vacancy rates include Manhattan, that marked a 0.9 percent year-over-year drop, and Phoenix, showing a 0.8 percent decrease. These two metros showed a 16.8 percent and a 18.0 percent vacancy rate in September, respectively, below the national rate. Los Angeles is also showing a slight improvement, with a 0.1 percent year-over-year decrease, with its vacancy rate reaching 16.3 percent as of September.

—Posted on October 28, 2024