Which U.S. Metropolitan Areas Have the Highest Office Vacancy Rates?

A new study by Outsource2india on the office rental market, metropolitan area in Texas and California dominate the list of top 10 cities with the highest vacancy rates. San Francisco leads with a staggering 21.7% of vacant office space, highlighting significant challenges in its commercial real estate sector.

Key takeaway

• Metropolitan areas in Texas and California, particularly San Francisco, lead the list of top 10 metropolitan areas with the highest vacancy rates in the office rental market. San Francisco stands out with a 21.7% vacancy rate.
• Over the past year, major metropolitan areas like San Jose and San Francisco have seen alarming increases in vacancy rates, with San Jose experiencing a 27.9% increase and San Francisco a 26.9% increase.
• When considering total vacant square footage, Washington leads with the equivalent of 1520 football fields of vacant offices.

Empty Offices in California and Texas

Data from the National Association of Realtors (NAR) for the first quarter of 2024 reveals that San Francisco stands far ahead of other metropolitan areas, with more than one out of every five offices vacant. Following closely are Houston (18.6% vacancy), Dallas (18%), and Austin (16.7%), all located in Texas. The top 10 list is completed by two other Californian metropolitan areas, Los Angeles (16%) and San Jose (15.6%). These figures underscore the widespread struggles faced by major cities in managing high vacancy rates in their office markets.

The issue is not new, as these areas had already experienced high vacancy rates a year prior. However, the situation has worsened significantly over the last twelve months, with an average increase in vacancy rates of 11%. San Jose and San Francisco were particularly hard hit, with increases of 27.9% and 26.9%, respectively. Interestingly, despite the substantial number of vacant offices, market rent prices per square foot have remained largely unchanged. Only Houston and Austin saw an increase in rent prices, from $29 to $30 per square foot and from $43 to $44 per square foot, respectively.

FFurthermore, a shift in perspective reveals a different top 10 list when considering total vacant square footage rather than vacancy percentages. Washington emerges on top with the equivalent of 1520 football fields of empty offices, surpassing even twice the size of Central Park in New York. Chicago and Dallas follow closely with 1474 and 1328 football fields of empty offices. This data highlights the spatial impact of office vacancies in these metropolitan areas.

These findings underscore the complex dynamics at play in the office rental market across major U.S. cities. As remote work continues to reshape workplace dynamics, there is a pressing need for this market to evolve and adapt.

Methodology

We analyzed the office rental market in major U.S. metropolitan areas using data sourced from the National Association of Realtors. Our study focused on tracking the changes in office rent from 2023 to 2024, and we extracted and analyzed key data points for the top 10 metropolitan areas with the highest vacancy rates.