The Office Landlord Market: Stay Alive Until 2025!

The national office vacancy rate is 15.7%, far better than the just-reported 29% vacancy rate for San Francisco. Nationally there is a record 242.7 million square feet of office sublease space available. Compare this with Q4 2019 when there was only 140 million square feet for sublease. According to a recent Colliers U.S. Office Market report, “Roughly 1.4 billion square feet of leases expiring before 2026 could result in nearly 300 million square feet of space being returned to the market.”.  then, in MarketWatch March 28, 2023, “Office property woes could be tip of iceberg if credit freezes up as $1 trillion bill comes due. Roughly $900 billion of commercial real estate loans come due through 2024, after an era of cheap debt.”  So we may have the perfect storm of office buildings only partially occupied, leases expiring and mortgage loans coming due…great, who will finance the tenant improvements to get the new tenants in and who will refinance office building loans as they become due? Already in our suburban market there is a 360,00 square foot 15-story Class A office building