2023 had highest office vacancy rate in 15 years

By Vaughn Cockayne - The Washington Times - Tuesday, January 9, 2024

As hybrid work models continue to dominate in the U.S., the age of the office park may be ending.

According to a Monday report from Moody’s Analytics, the nation’s office vacancy rate rose to 19.6% in 2023, its highest level in 15 years. That rate soundly defeats the pre-pandemic levels of office vacancy that, according to the report, stood at 16.8%.

Usually, as the report notes, high office vacancy rates correspond with an economic crisis, as it did in 2008. However, the current vacancy crisis corresponds with changes in worker and manager trends.

Despite 2023 being the year when major companies brought their workers back to the office, many aren’t at their desks five days a week. Hybrid models, where workers are at home for a few days and in the office for the rest, remain popular.

The numbers suggest that the era of office buildings may be ending as workers enjoy the freedom of working remotely. This could spell disaster in the short term for landlords who will eventually have to sell their empty office space.

However, the report notes that suburban office spaces are at higher occupancy than their city counterparts due to their proximity to communities and shorter commute times.