REPORT: U.S. Offices With Biggest Vacancy Jumps All Have A Lot In Common

The U.S. office buildings that suffered the sharpest increases in vacancy from the beginning of 2020 to the end of 2022 — those most impacted by the pandemic, in other words — tend to have a number of common characteristics, according to a report by CBRE.

CBRE defines "hard-hit buildings" as the 10% of office properties over 100K SF with the largest increase in vacant space from 2020 to 2022. The report analyzed office buildings in 64 major metro markets.

Hard-hit buildings tend to be in downtown markets, especially on the West Coast and in the Northeast, and are generally found in places with higher crime rates and fewer amenities outside the properties, CBRE's report said.

Smaller buildings, meaning those between 100K SF and 300K SF, made up the largest share of those in the hard-hit category. Age doesn't seem to be a factor, however. The majority of hard-hit office buildings, like the majority of all office buildings, were developed between 1980 and 2009.

The vacancy increase in the hardest-hit buildings accounted for 80% of all the newly vacant office space nationwide, despite representing only 17% of total office inventory by square footage.

CBRE estimates that if the hard-hit buildings aren't revived or repurposed in some way, they will push the long-term U.S. office vacancy from its pre-pandemic level of 12% to 14.5%, creating an additional 103M SF of vacant space.

The trend toward higher office vacancies looks to continue into 2023. Moody's Analytics reports more than 5M SF of office space was vacated nationwide during Q1 2023 as hybrid work models settle into permanence. At the same time, only 3M SF of new office space was delivered.

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Related Topics: Pandemic impact on office
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