Office Real Estate Finds Footing
Office Sector Slowly Rebounding After Pandemic Shock
- Office vacancy rose from 12.3% before the pandemic to a peak of 17.2% in Q1 2024
- Positive absorption returned over the last 4 quarters, bringing vacancy down to 16.7%
Performance Varies Sharply by Market and Property Type
- Urban vacancy is 19.2%, while suburban is 16% — but small, newer suburban offices average just 11.2%
- Markets like Dallas, Charlotte, NYC, and Chicago have posted multiple quarters of positive office absorption
- Struggling markets include San Francisco (27% vacancy) and Boston, with ongoing negative demand
Outlook Uncertain, but Construction is Low
- Limited construction and return-to-office trends could support further improvement
- Rising unemployment may paradoxically lift office demand in 2025
* Through 1Q
Sources: Marcus & Millichap Research Services, CoStar Group, Inc.
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