U.S. Office Market Outlook – June 2024

Office investment surpassed the $10 billion mark at the end of May, the latest Yardi Matrix US office market outlook shows.

Report Highlights

• The national office vacancy rate clocked in at 17.8 percent at the end of May, an 80-basis-point increase from the same time last year.
• National full-service equivalent listing rates averaged $37.72 per square foot in May, down 170 basis points year-over-year but 6 cents less than in the previous month.
• The office under-construction pipeline continued to shrink, featuring 83.8 million square feet under construction as of May.
• Nationwide office transaction volume totaled $10.2 billion year-to-date in May.
• Office properties traded at an average of $165 per square foot.

California markets see record vacancy increase

In May, national full-service equivalent listing rates averaged $37.72 per square foot, marking a 170-basis-point decrease from the previous year but a 6-cent increase from the prior month, per Yardi Matrix data. Dallas (6.6 percent), Miami (6.2 percent), Atlanta (4.7 percent) and Detroit (4.5 percent) notably saw significant year-over-year increases in average rents.

The national office vacancy rate reached 17.8 percent by the end of May, representing an 80-basis-point increase from the same period in 2023. Vacancy recorded the highest increases in San Francisco (510 basis points), Dallas (450 basis points), Seattle (350 basis points), San Diego (310 basis points) and Denver (280 basis points).

Office investment remains concentrated in Washington, D.C.

As of May, the under-construction pipeline featured were 83.8 million square feet of office space nationwide, constituting 1.2 percent of the total stock, according to Yardi Matrix. During the same period, 18.5 million square feet came online.

Boston led with 13.6 million square feet under construction, representing 5.4 percent of existing stock. San Francisco followed with nearly 5.2 million square feet (3.2 percent of stock), Dallas with 4.7 million square feet (1.7 percent of stock), Austin with 4.4 million square feet (4.7 percent of stock) and San Diego with 4 million square feet (4.2 percent of stock).

At the same time, office investment in the first five months of 2024 amounted to $10.2 billion, with office properties trading at an average of $165 per square foot. Washington, D.C., leads the way in office investment ($999 million year-to-date in May), followed by the Bay Area ($795 million), Boston ($761 million), Houston ($718 million) and Manhattan ($570 million).

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