With Office Vacancies Climbing, Yardi Matrix Analyzes the Market

Vacancy rate is at 15.5 percent nationally as of May, and could double in some locations

SANTA BARBARA, Calif., June 29 2021 – A new bulletin from Yardi® Matrix analyzes how high office vacancy rates may climb as the US redefines what office-based employment will look like post-pandemic.

As of May, the total U.S. vacancy rate hit 15.5%, up 240 basis points from spring 2020. Additionally, the amount of space available for sublease more than doubled over the last year, to 118.8 million square feet.

Matrix analyzed space per foot by office workers, occupancy rates, and the potential drop in demand based on surveys of office-using employers. If office usage drops by 10% and companies reduce space needs by a corresponding amount, vacancy rates could rise by 7 to 9 percentage points. If that happens, vacancy rates could rise to 25-30% in many metros.

Further complicating matters, 161 million square feet of office space is under construction and slated to add 2.5% to total stock over the next several years. Higher vacancy rates will limit rent growth and erode property values, especially on lower quality properties, which may be converted to other uses.

“While details remain fuzzy, offices face many challenges in coming years that involve a re-thinking of the nature of work and how to design workspaces in the future,” states the report.

Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn more.

About Yardi

Yardi® develops and supports industry-leading investment and property management software for all types and sizes of real estate companies. Established in 1984, Yardi is based in Santa Barbara, Calif., and serves clients worldwide. For more information on how Yardi is Energized for Tomorrow, visit yardi.com.