U.S. Office Vacancy Breaks All-Time Record

This was the headline from the January 8, 2024 BisNow newsletter. “Roughly 19.6% of office space in major American metropolitan areas was vacant at the end of the year, according to new data from Moody’s Analytics. That is up from 18.8% at the end of 2022 and higher than the previous record of 19.3% reached in 1986 and 1991.” Texas is reporting the highest vacancy rates in the country, while Florida’s low taxes making it a hot spot for finance companies has resulted in some of the lowest vacancy rates ”dropping from 1991 highs of 28.8% and 28.1%, respectively, to 14.2% and 18.9% in 2023.”  In the Winter 2023 SIOR Report, with a cover title of ‘Cash Is King’, SIOR broker Conrad Madsen from Dallas stated “Survive until “25” is the mantra these days,” Madsen shares. “Most are not too optimistic for the next 12 months, as massive debt maturities will surface and will trigger many properties’ keys being turned back to lenders which ultimately will ring down many regional banks, especially those overallocated in the office asset class. The ‘B’ & ’C’ office sectors will be hit hardest but will ultimately pull everyone down as most funds and lenders are invested in all asset classes. We need these assets to begin trading so transactional volume picks up and the market starts to get out of the current stagnation.”