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.
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