Read the latest Yardi Matrix Office Market Outlook.
The national office vacancy rate rose to 18.8 percent at the end of April, up by 210 basis points from April 2023, the latest Yardi Matrix US office market outlook report shows.
Report Highlights
- The national office vacancy rate clocked in at 18.8 percent at the end of April, a 210-basis-point increase from the same time in 2023.
- National full-service equivalent listing rates averaged $37.66 per square foot in April, down 150 basis points year-over-year and 8 cents less than in the previous month.
- The office under-construction pipeline has significantly decreased, featuring 83.7 million square feet under construction as of April.
- Nationwide office transaction volume totaled $7.5 billion in the first four months of 2024.
- Office properties traded at an average of $157 per square foot.
Life science markets also struggle amid vacancy surge
The national office vacancy rate reached 18.8 percent by the end of April, marking a 210-basis-point increase from the same period in 2023. Vacancy rates have risen across nearly all markets, with tech hubs like San Francisco (650 basis points), the Bay Area (400 basis points) and Seattle (400 basis points) seeing substantial increases year-over-year. Financial centers such as Dallas (390 basis points) and Charlotte (380 basis points), as well as lab space hubs like Boston (230 basis points) and San Diego (370 basis points) have also witnessed notable increases.
In April, national full-service equivalent listing rates averaged $37.66 per square foot, showing a 150-basis-point decrease year-over-year and an 8-cent decrease from the previous month. Markets with the highest increases in average in-place rent include Miami (5.2 percent), New Jersey (4.8 percent), Detroit (4.2 percent), Atlanta (3.8 percent) and Tampa (2.9 percent).
Office construction starts post dramatic decline
The office construction pipeline has seen a significant decrease, with 83.7 million square feet under construction as of April, comprising 1.2 percent of total stock. This reflects a more than 50 percent decline in the past 18 months due to completed projects and slower starts. In 2024, only 3.2 million square feet of new office space began construction, compared to 44.2 million square feet in 2023, primarily driven by the life science and medical office sectors. However, even this has now stalled. The potential for future interest rate cuts may gradually revive development, but a notable increase in office starts is unlikely soon.
In Boston, the active pipeline totals 13.8 million square feet, representing 5.6 percent of total stock, while Nashville, Tenn., and Austin, Texas, follow with 2.7 million and 4.1 million square feet, respectively, or 4.6 and 4.4 percent of stock each. Miami has 2.9 million square feet under construction, accounting for 4.0 percent of stock.
At the same time, office investment in the first four months of 2024 amounted to $7.5 billion, with office properties trading at an average of $157 per square foot. Washington, D.C., leads the way in office investment ($937 million year-to-date in April), followed by the Bay Area ($469 million).
Read the full Yardi Matrix Office Market Report: May 2024.
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