National Office Vacancy Rate Hits New High of Nearly 20%

Office vacancies continue to rise as companies decide against re-signing leases or pull out of existing ones. 

The national office vacancy rate hit a record-breaking 19.6% at the end of 2023, according to a report by Moody’s Analytics. That’s above the previous record of 19.3% set in 1986, following a five-year office building boom, and matched in 1991, during the savings and loan crisis. 

It’s also above the vacancy rate of 18.8% during the same time in 2022. 

The vacancy rate has risen as a result of companies continuing pandemic-era remote work trends, as well as new construction becoming available for leasing. Nearly 6 million square feet of office space came to the market last year, with 1.8 million square feet becoming available in just the third quarter.

In the fourth quarter, Moody’s Analytics data shows that in 50 of 79 primary metros, more office tenants moved out than in. San Francisco led the loss with 2.4 million square feet of move-outs in that quarter alone. Meanwhile, Washington, D.C., and Chicago saw over 100,000 square feet of tenants pack their boxes.

Moody’s Analytics’ data goes back to 1979, allowing comparisons to previous financial crises and office downturns. When more than 1,000 U.S. saving and loan associations failed between 1986 and 1995, the resulting recession caused offices to sit empty. Unlike previous office slumps, however, hybrid and remote jobs are now more prevalent than ever.