Report Highlights
- The national office vacancy rate reached 19.5 percent at the end of September, a 170-basis-point increase from the same time in 2023.
- National full-service equivalent listing rates averaged $32.89 per square foot, an 11-cent increase from the previous month.
- The office construction pipeline continued to shrink, with 68.5 million square feet underway as of September.
- Office investment year-to-date in September totaled $23.8 billion.
- Office properties traded at an average of $171 per square foot.
Vacancy rates climb as companies downsize
The national office vacancy rate hit 19.5 percent at the end of September, marking a 170-basis-point rise from the same period in 2023, as reported by Yardi Matrix. With many pre-pandemic leases expiring, numerous companies are scaling back their office space, which is contributing to the increased vacancy rates and putting additional pressure on the office sector.
The markets experiencing the most significant year-over-year increases in office vacancy were Austin (up 660 basis points), Boston (610 basis points), the Bay Area (540 basis points), Denver (400 basis points) and Dallas (390 basis points).
In September, the average national full-service equivalent listing rates stood at $32.89 per square foot, reflecting an 11-cent increase from the prior month and a 3.6 percent increase compared to the same time last year. Notably high listing rates were recorded in Manhattan ($67.93 per square foot), San Francisco ($67.32 per square foot), Boston ($57.98 per square foot) and Miami ($52.87 per square foot).
Office projects decline amid steady investment
As of September, the office construction pipeline has continued to contract, with 68.5 million square feet underway, which represents 1.0 percent of the total inventory, according to data from Yardi Matrix. This pipeline has decreased by nearly a third during the first three quarters of this year. Although 37.5 million square feet was delivered, only 9.3 million square feet of new projects commenced construction.
Boston topped the list with 11.5 million square feet under construction, accounting for 4.6 percent of its total stock. Following closely was San Francisco, with 4.7 million square feet, or 2.9 percent of its inventory. San Diego and Dallas each reported 4.0 million square feet in development, representing 4.2 percent and 1.4 percent of their stocks, respectively, while Austin had 3.4 million square feet, making up 3.6 percent of its inventory. Miami also reported 2.8 million square feet under construction, constituting 3.9 percent of its total stock.
Year-to-date office investment in September reached $23.8 billion. At the same time, the average sale price was $171 per square foot. Manhattan led office sales with a total of $2.7 billion, followed by Washington, D.C., with $2 billion in transactions. The Bay Area ranked third, with total office sales amounting to $1.8 billion.
Read the full Yardi Matrix Office Market Report: October 2024.
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