Office Rental Vacancy

Office vacancy rates are inversely correlated with macroeconomic variables, including total employment and corporate profit figures. In turn, vacancy rates are low when the economy is gaining strength; at this time, businesses are hiring and corporations are expanding their presence by renting out more offices in the United States. Technological trends also impact vacancy rates, as the internet has enabled many workers to perform tasks remotely, tempering the need for office space. This trend has mitigated declines in office space vacancy as many businesses rely on work performed outside of the office and, increasingly, from workers abroad.

2009 office vacancies jumped to 14.9%, highlighting the recession’s devastating effects. Furthermore, many businesses opted to hire contract workers who could function remotely, removing the need for office space and saving money while economic conditions were poor. Vacancy rates continued to expand in 2010 and 2011 as the economy was still on the rebound following a historic recession. However, a turnaround occurred in 2012 as the office vacancy rate fell to 16.0%.

In 2020, office rental vacancy rates increased to 15.5% under the booming popularity of WFH options for companies. New variants of COVID-19 (coronavirus) led to continued remote work practices across all companies. As a result, office vacancy rates rose by 8.1% in 2021. Despite a swift economic recovery in 2021, many in the workforce remained home because of lingering concerns about the pandemic. As time passed, company policies became more lenient with their employees and delayed mandatory return policies. As a result, in 2022, the office vacancy rate continued to rise 2022 to 17.9%. Scaling up permanent remote job opportunities is also a significant factor in this rate. That being said, companies have created a big push to bring workers back to the office in 2023 by eliminating remote positions or offering incentives to new workers to work in the office full-time. However, there is still a large portion of the workforce who are being viewed as permanent remote employees. As a result, the office vacancy rate has risen to 19.2% in 2023 and has stayed high. It will also boost in 2024 and 2025 to reach 21.2% in the latter year as these factors remain afoot. Purposefully constructing speculative buildings in areas with high business activity will also strengthen vacancy rates. Developers anticipate that companies eager to operate in such prime locations will eventually lease these spaces. These tenants are often presumed willing to pay high rental fees set by landlords for working in these sought-after areas.