Staggering 19.6 PERCENT of US office space is unoccupied – emptier than at any other point in last 40 years
As many as 19.6 percent of American office spaces are vacant; the emptiest number in the last forty years.
The drastic shift has increased due to the impact of the pandemic, the work-from-home lifestyle, years of overbuilding and the decline of the office market in the 1980s and 1990s. The Wall Street Journal.
According to Moody’s Analytics, office spaces in major U.S. cities were unrented at the end of the fourth quarter and the number of vacant spaces increased 18.8 percent from last year.
The latest record slightly exceeded the highest record, at 19.3 percent in 1986 and 1991. The lowest percentage of vacant offices occurred in 1976, at about 6 percent.
The rise in vacant office buildings in the 1980s and 1990s was followed by a rise in overdevelopment as cheap land, especially in the South, continues to struggle in cities like San Antonio, Dallas and Austin, Texas.
As many as 19.6 percent of American office spaces are vacant; the emptiest number in the last 40 years
A vacant office building is pictured in the Bay Area, where San Francisco has reached a record high of 27.1 million square feet of vacant space
In 1991, cities such as Fort Lauderdale and Palm Beach in Florida and New Orleans were the top three cities in the US experiencing vacancy.
At the time, banks were known to finance proposed spaces even if there were no tenants to fill the buildings. Developer Bruce Eichner said the 1 million-square-foot Manhattan office building he built in the 1980s was “100 percent empty.”
The excessive supply of buildings and the lack of tenants to occupy them continues to impact current spaces and has long been the reason why spaces in the US are emptier than in Europe and Asia.
Many of the abandoned offices were originally built in the 1980s and previously struggled to find workers to fill them.
In addition to offices in the South, the West Coast has also joined the trend, as San Francisco has seen an increase in vacant office buildings and storefronts.
In October, Microsoft joined the Bay Area’s “tech exodus,” subletting up to 500,000 square feet of its offices as the city spirals further into a “doom loop.”
The Microsoft office at 555 California Street, where offices up to 49,000 square feet are available for lease
In San Francisco, sleeping people, discarded clothes and used needles are seen that have influenced the dramatic increase in office vacancies
Meta and LinkedIn are also renting out their office spaces in the city as vacancy rates hit a record high of 34 percent in September as shops were driven out of the city center by increased crime.
San Francisco – which has long been popular with technology companies – was also hit hard by the pandemic with its high density of office space.
Chris Roeder, executive director of Jones Lang LeSalle in San Francisco, told Al Jazeera: “Almost 80 percent of the space in downtown San Francisco is office space, unlike New York or most other cities, which have more residential .’
At the same time, the city is also grappling with rampant fentanyl use and fatal overdoses. In the first five months of 2023, there were nearly 346 overdose deaths in the city – an increase of more than 40 percent from the same period in 2022.
The homeless population has also taken over the city, driving out businesses and even residents as a result.
Recently, Washington DC managed to surpass San Francisco with the highest share of office buildings with bank loans at risk of default as government employees continue to work from home after the pandemic.
According to real estate data firm Trepp, healthcare loans at DC-area offices reached 72 percent in the third quarter, surpassing San Francisco’s 71 percent.
For reference, at the end of last year the rate for the capital region was 38 percent.
There’s talk of a vacant retail space in San Francisco as the city is ravaged by homelessness, drug use and big tech companies fleeing the pandemic to work from home
Washington’s vacancy rate was 21.1 percent in the third quarter, compared to San Francisco’s 34 percent, according to real estate brokerage CBRE Group.
There’s talk of a vacant office building in San Francisco as the Bay Area hits a record 34 percent vacancy rate
Washington’s office vacancy rate was 21.1 percent in the third quarter, compared to San Francisco’s 34 percent, according to real estate brokerage CBRE Group.
One of the biggest factors is federal workers’ hesitancy to return to in-person work. Nearly 50 percent of DC workers worked remotely in 2021, Census data shows.
In his State of the Union address in early 2022, President Joe Biden said it was time for Americans to go back to work and “refill our great downtown.”
“That’s what we do here in the federal government. The vast majority of federal employees will return to in-person work,” he added.
In In April, the White House directed agencies in an internal memo to “substantially expand meaningful in-person work in federal offices.”
According to the Government Accountability Office, more than 75 percent of available office space across 17 different federal agencies remains vacant.
Agencies spend approximately $2 billion per year operating and maintaining federal office buildings and more than $5 billion per year on leases.
Washington DC has surpassed San Francisco with the highest share of office buildings with bank loans at risk of default
Fort Lauderdale came in second as the city recently dropped from 28.1 percent of job openings to 18.9 percent
Some Florida cities have managed to keep their office space filled, while in Palm Beach the rate fell from 28.8 percent to 14.2 percent in 2023.
Fort Lauderdale came in second as the city dropped from 28.1 percent of job openings to 18.9 percent.
Office buildings began plastering the area in the 1980s as vacancy rates rose, but in 2023 developers began building high-end spaces, mainly for finance companies chasing lower tax rates and warmer weather.
“That has become a game changer for the market,” Kevin Probel, senior managing director at real estate brokerage JLL, told The Washington Post.