National full-service equivalent listing rates averaged $33.41 per square foot in February, edging up 5.7 percent compared to the same time last year, according to the latest Yardi Matrix U.S. office market outlook.
Report Highlights
- The national office vacancy rate reached 19.7 percent at the end of February, unchanged from the previous month.
- National full-service equivalent listing rates averaged $33.41 per square foot, rising by 3 cents from the previous month and 5.7 percent year-over-year.
- The office construction pipeline contracted again, featuring 48.6 million square feet under development as of February.
- Office investment totaled $7 billion during the first two months of 2025, with office properties trading at an average of $177 per square foot.
Office vacancies hold steady
In February, the national office vacancy rate reached 19.7 percent, marking a 180-basis-point increase from the previous year and holding steady compared to January. The ongoing shift toward remote and hybrid work continues to push vacancies higher. San Francisco (27.8 percent), Austin (27.4 percent), the Bay Area (26.2 percent), Denver (25.0 percent) and Detroit (24.6 percent) recorded the highest vacancy rates.
Meanwhile, national full-service equivalent listing rates averaged $33.41 per square foot, edging up 3 cents month-over-month and 5.7 percent year-over-year. According to Yardi Matrix, Manhattan led with the highest asking rate at $68.98 per square foot, followed by San Francisco at $63.63 per square foot.
Office construction slows as demand wanes
In February, the office construction pipeline featured 48.6 million square feet, making up just 0.7 percent of total inventory, Yardi Matrix reports. Office deliveries hit a 10-year low in 2024, and 2025 is on pace for an even smaller total. With only 11.3 million square feet breaking ground last year and no significant rebound expected, demand for new office development has dwindled as vacancies rise, economic uncertainty lingers, and remote work remains prevalent.
Boston led the nation with 6.5 million square feet of office space under construction (2.5 percent of its total inventory). Austin followed with 3.6 million square feet (3.7 percent), while San Francisco had 3.2 million square feet (2.0 percent) underway. San Diego reported 3.1 million square feet (3.2 percent) in development, and Dallas rounded out the top five with 2.9 million square feet (1.0 percent).
Meanwhile, office sales totaled $7 billion in the first two months of the year, with properties trading at an average of $177 per square foot. Manhattan led all markets with $1.8 billion in sales, followed by Chicago ($561 million) and the Bay Area ($467 million).
Read the full Yardi Matrix Office Market Report: March 2025.
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