{"id":1004744374,"date":"2025-01-30T02:52:04","date_gmt":"2025-01-30T10:52:04","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004744374"},"modified":"2025-02-25T02:21:02","modified_gmt":"2025-02-25T10:21:02","slug":"commercialedge-office-report-january","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/commercialedge-office-report-january\/","title":{"rendered":"Office Report: Sector Faces Ongoing Challenges Into 2025"},"content":{"rendered":"\n

The office sector faces another challenging year in 2025, as the effects of a post-pandemic transformation continue to unfold, according to the latest CommercialEdge<\/em> report.<\/p>\n\n\n

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\"Aerial
The national office vacancy rate rose last year and is expected to remain high despite return-to-office mandates.\u00a0Image by Marcio Silva\/iStockphoto.com<\/em> <\/figcaption><\/figure><\/div>\n\n\n

The national office vacancy rate surged throughout the past year and is unlikely to decline this year despite return-to-office mandates<\/a> from prominent companies. Hybrid and remote work have solidified their place, and any vacancy reductions will likely stem from office stock shrinking due to obsolescence or conversions rather than rising occupancy.<\/p>\n\n\n\n

Conversions, while ongoing, face financial and logistical hurdles<\/a> that limit their pace. Programs like New York\u2019s Office Conversion Accelerator and D.C.\u2019s Office-to-Anything initiative aim to encourage adaptive reuse, with growing interest in converting offices to data centers, industrial spaces and coworking hubs alongside residential projects.<\/p>\n\n\n\n

Sales volume might see a slight uptick, but prices are expected to stagnate. Distressed transactions will dominate, driven by maturing loans on properties struggling with occupancy challenges and persistent inflation pressures.<\/p>\n\n\n\n

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READ ALSO:<\/strong> What\u2019s Defining Office in 2025?<\/a><\/p>\n\n\n\n

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In December, office-using employment sectors gained 44,000 jobs, marking a 40-basis-point year-over-year growth and bringing the total to 35 million. Most of this growth occurred within the professional and business services sector, which gained 28,000 jobs. In comparison, the financial activities sector added 13,000 positions, while the information sector saw a modest rise of just 10,000 jobs.<\/p>\n\n\n\n

The office construction pipeline has continued to shrink, with 54.7 million square feet underway at the end of 2024\u2014equivalent to just 0.8 percent of total inventory, according to CommercialEdge data. This marks a significant 43.6 percent decline from the 97 million square feet under construction at the beginning of last year. In 2024, only 43.2 million square feet of office space was completed, making it the smallest annual delivery volume since 2013.<\/p>\n\n\n\n

Boston led the nation with 8.7 million square feet of office space under construction, representing 3.4 percent of its total inventory. San Francisco followed with 3.8 million square feet, or 2.3 percent of its stock. Austin reported 3.5 million square feet under construction, or 3.7 percent of its total stock. San Diego had 3.1 million square feet underway (3.1 percent of stock), closely followed by Dallas with 2.9 million square feet, or 1.0 percent of its inventory. Meanwhile, Manhattan had more than 2.7 million square feet in progress, making up 0.6 percent of its inventory.<\/p>\n\n\n\n

Office vacancies surge across key markets<\/h2>\n\n\n\n

The national office vacancy rate climbed to 19.8 percent at the end of December 2024, marking a 150-basis-point increase compared to the same time in 2023 and a 40-basis-point rise from the previous month, according to CommercialEdge. Although vacancies have risen across all markets in recent years, some have been hit harder than others.<\/p>\n\n\n\n

Among the top 25 markets tracked by CommercialEdge, six experienced vacancy rate hikes exceeding 500 basis points in 2024. Austin led the pack with a 690-basis-point surge since December 2023, pushing its vacancy rate to 27.9 percent. Other markets with significant increases included the Bay Area and Portland (both up 620 basis points), San Francisco and Philadelphia (up 520 basis points) and Boston (up 510 basis points).<\/p>\n\n\n\n

In December, national full-service equivalent listing rates averaged $33.11 per square foot, marking a 26-cent increase from the prior month and a 4.5 percent rise year-over-year. Miami posted the highest listing rate at $54.37 per square foot, closely followed by the Bay Area at $54.13 and Boston at $53.35. Austin and San Diego also stood out with rates of $45.68 and $43.28 per square foot, respectively.<\/p>\n\n\n\n

Read the full CommercialEdge office report<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Vacancy reductions will likely stem from shrinking stock, not rising occupancy, the latest CommercialEdge report shows.<\/p>\n","protected":false},"author":741,"featured_media":1004744377,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[22251,23891,21742,21747,37749,51037,52555,41267],"tags":[50674],"class_list":["post-1004744374","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-in-focus","category-national","category-latest","category-office","category-research-center-cpe","category-trends","category-yardimatrix-office-reports","category-yardimatrix-reports","tag-commercialedge"],"acf":[],"yoast_head":"\nOffice Report: Sector Faces Ongoing Challenges Into 2025 - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"Vacancy reductions in 2025 will likely stem from shrinking office stock, not rising occupancy, the latest CommercialEdge report shows.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/commercialedge-office-report-january\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Office Report: Sector Faces Ongoing Challenges Into 2025\" \/>\n<meta property=\"og:description\" content=\"Vacancy reductions in 2025 will likely stem from shrinking office stock, not rising occupancy, the latest CommercialEdge report shows.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/commercialedge-office-report-january\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2025-01-30T10:52:04+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-02-25T10:21:02+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/01\/iStock-532167602.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"917\" \/>\n\t<meta property=\"og:image:height\" content=\"710\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Corina Stef\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/commercialedge-office-report-january\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/commercialedge-office-report-january\/\",\"name\":\"Office Report: Sector Faces Ongoing Challenges Into 2025 - 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