Office Market Real Estate Trends

U.S. Office Market Outlook – December 2024

Cover image for the U.S. Office Market Outlook December 2024
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The national office vacancy rate reached 19.4 percent by the end of November, a substantial 120 basis point uptick from the same period the previous year, according to the latest Yardi Matrix U.S. office market outlook.

Report Highlights

  • The national office vacancy rate reached 19.4 percent at the end of November, an increase of 120 basis points compared to the same period in 2023.
  • National full-service equivalent listing rates averaged $32.85 per square foot, reflecting a modest six-cent increase over the previous month.
  • The office construction pipeline continues to contract, with 57.8 million square feet under development as of November.
  • Year-to-date office investment totaled $32.6 billion through November.
  • Office properties changed hands at an average price of $179 per square foot.

Office vacancies rise in 6 key markets

The national office vacancy rate reached 19.4 percent by the end of November, Yard Matrix shows, reflecting a 120-basis-point increase compared to the same period in 2023. Over the past year, six markets experienced vacancy rate increases exceeding 500 basis points. Austin saw the sharpest rise at 650 basis points, followed by Boston at 630 basis points and Portland, Ore., at 620 basis points.

National full-service equivalent listing rates averaged $32.85 per square foot in November, representing a six-cent increase from the previous month and a 3.7 percent year-over-year growth. Manhattan led the nation with the highest rates at $68.87 per square foot, narrowly edging out San Francisco at $68.81. Other leading markets included the Bay Area at $54.04 per square foot, Boston at $53.35 per square foot, and Miami at $52.84 per square foot.

Office construction drops by 39 million sq. ft.

The office construction pipeline is steadily contracting, with 57.8 million square feet under development as of November, representing just 0.8 percent of total inventory, according to Yardi Matrix. This reflects a monthly reduction of 3 million square feet and a cumulative decline of nearly 39 million square feet since the beginning of the year. Throughout 2024, the pipeline has consistently shrunk by an average of 3.5 million square feet per month.

In 2024, 39.7 million square feet of office space was completed, while only 9.1 million square feet began construction. Boston led the nation in active office development, with 9.2 million square feet underway—3.6 percent of its total inventory. San Francisco followed with 3.8 million square feet under construction, or 2.3 percent of its stock, and Austin had 3.6 million square feet in progress, equating to 3.7 percent of its inventory.

San Diego reported 3.1 million square feet under development, or 3.2 percent of its stock, while Dallas had 3.0 million square feet underway, representing 1.1 percent of its inventory. Manhattan, meanwhile, had over 2.7 million square feet in progress, making up 0.6 percent of its total stock.

Office investment totaled $32.6 billion year-to-date through November, with properties trading at an average of $179 per square foot. Manhattan led in transaction volume, with $3.8 billion in deals, followed by Washington, D.C., at $2.5 billion, and the Bay Area at $2.1 billion.

Read the full Yardi Matrix Office Market Report: December 2024.

About the author

Corina Stef

Corina Stef started her tenure as a music journalist a decade ago and has been occupying a full-time real estate editor and blogger position since 2017. She is a senior associate editor with Commercial Property Executive and Multi-Housing News who focuses on commercial real estate trends and in-depth stories.

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