Among the major office markets in the United States, Manhattan, NY, had the lowest vacancy rate in the fourth quarter of 2023. Approximately 13 percent of office space was vacant in that quarter, compared to 33.4 percent in Phoenix. Since the onset of the COVID-19 pandemic, the office real estate sector has been suffering an increase in office vacancies, affecting both downtown and suburban properties.

In the third quarter of 2024, office vacancy rates in the UK were the lowest in Birmingham, at 6.3 percent. The vacancy rate is the percentage of available office rental units that are vacant or unoccupied during a given time. High vacancy rates in a city can mean that supply is outweighing demand, or that the quality of particular properties available not meeting the desired demands of the rental market. After the COVID-19 outbreak, demand for offices has declined, leading to increased vacancies across most markets.

Vienna, Luxembourg, and Hamburg were the markets with the lowest vacancy rates in Europe in the fourth quarter of 2024. Vacancy rates are a measurement of unoccupied properties during a given period and are a good indication of an area’s desirability and opportunity for development. High vacancy rates can indicate an economic downturn, a lack of demand, or possibly that standards do not meet speculative renters’ needs. Low vacancy rates are, in general, considered a good thing as it means there is a good level of demand from customers, although low vacancy rates may also show a need for more development which is not being met. Since the beginning of the coronavirus (COVID-19) pandemic, vacancy rates in the office sector have been on the rise because of declining occupiers' demand.
The major European office markets? London, Paris, and Stockholm were the most expensive markets for office real estate in Europe in 2023. In London, prime office space, which refers to a property of the highest quality, optimal location, and standard dimensions that are in accordance with the local demand, was able to fetch a staggering price of 2,069 euros per square meter. When it comes to total stock, Berlin ranked among the largest markets in Europe. Where is office space most profitable? According to 2024 forecast the UK is expected to see the most return on investment by 2025 and 2026 than Europe. Industry experts forecast that investment will have better prospects than development, and that central city offices will perform better than suburban offices.

Vacancy rates across the office real estate sector in the U.S. increased during the coronavirus pandemic. Before 2020, the quarterly vacancy rate was around 12 percent, but as the pandemic unfolded, it climbed to above 15 percent. In the fourth quarter of 2023, about 16.9 percent of office space across the country was vacant. In some of the major U.S. markets, vacancies reached up to 30 percent. With a considerable part of the workforce working from home or following a hybrid working model, businesses are cautious when it comes to upscaling or renewing leases. Workplaces may never be the same again The COVID-19 pandemic has changed the way that companies operate, and working from home has become the new normal for many U.S. employees. The function of the office has evolved from the primary workplace to a space where employees collaborate, exchange ideas, and socialize. That has shifted occupiers’ attention toward spaces with modern designs that can accommodate the office of the future. Many businesses used the pandemic time to revisit their office guidelines, remodel or do a full or partial fit-out. With so much focus on quality, older buildings with poorer design or energy performance are likely to suffer lower demand, resulting in a two-speed market. What do higher vacancy rates mean for investors? Simply put, if landlords do not have tenants, their income stream is disrupted, and they cannot service their debts. April 2023 data shows that several U.S. metros had a significantly high share of distressed office real estate debt. In Charlotte-Gastonia-Concord, NC-SC, more than one-third of the commercial mortgage-backed securities for offices were delinquent, in special servicing, or a combination of both. Nevertheless, offices had a lower delinquency rate compared to other commercial property types, such as lodging or retail properties.

In the fourth quarter of 2023, the prime office vacancy rate in Kuala Lumpur was 31.3 percent. In comparison, the vacancy rate of prime office real estate was under one percent in Seoul during the same period.

Vacancy rates in the German office market have risen since the beginning of the coronavirus pandemic. In the fourth quarter of 2023, Germany's capital city, Berlin, saw the third-lowest prime office vacancy rate at 5.7 percent. That was an increase from 3.7 percent recorded in 2022. The city with the lowest vacancy was Cologne, where 2.9 percent of the offices were vacant.

The vacancy rates of office real estate in Colombia between 2022 and 2024 declined in all the cities observed. In the second quarter of 2024, Barranquilla reported the lowest vacancy, at 5.3 percent - less than half of the vacancy rate in the same quarter in 2022. The vacancy rate for office real estate in Cali was 8.7 percent in 2024, up from 11 percent in 2023.

Katowice and Lodz had the highest vacancy rate of any major city in Poland at 21.5 percent and 20.3 percent in 2023, respectively.

In the fourth quarter of 2024, the office property vacancy rate in the central business district of Melbourne, Australia, was the highest, with a rate of around 19.8 percent. The central business district of Sydney had an office vacancy rate of 14.7 percent in comparison.

In 2023, Münster and Karlsruhe had the lowest vacancy rates in Germany at less than three percent which clearly indicates the high demand for this asset class. In Berlin and Munich, which are the two largest office real estate markets in the country by volume of office stock, the vacancy rate stood at 4.2 percent.

The coronavirus (COVID-19) pandemic has led to major cyclical and structural changes in the office real estate sector. As a result of the economic downturn and rising unemployment, along with an increasing share of businesses that introduce the option to work from home, office real estate demand in certain regions worldwide is forecast see a short term decline. In 2022, office real estate vacancy rates are forecast to peak at 17.4 percent in the United States, 10.5 percent in Europe, and 25.9 percent in Greater China. In the Asia Pacific region and in Canada, vacancies are expected to reach their highest point in 2022.

In the second quarter of 2021, the vacancy rate of office space in Beijing amounted to almost 17 percent. It was the second-lowest vacancy rate among all cities in mainland China. There is a large disparity between real estate in tier-1 cities and the rest of China, in terms of the vacancy rate and the monthly rent.

As of the third quarter of 2021, approximately 13.8 percent of office real estate properties in Kyiv were vacant, which was the highest vacancy rate across the CEE region. In comparison, only 3.7 percent of offices were vacant in Vilnius.

This statistic presents the office vacancy rate in New York from 2006 to 2013 and a forecast thereof until 2019. The office vacancy rate in New York amounted to 8.9 percent in 2013 and it was projected to decrease to 7.4 percent in 2019. For more recent data on office vacancy rates in New York click here.

The office real estate leasing market in the United States was severely affected by the coronavirus pandemic. Before the pandemic, the average vacancy rate of downtown offices was 10.5 percent and in 2023, it increased to 17.9 percent. Suburban offices were less affected, with the vacancy rate rising from 12.6 percent to 16.4 percent.

This statistic shows the forecasted vacancy rates of office space in selected cities worldwide in 2019. The average vacancy rate of office space in Sydney, Australia is forecast to be 2.4 percent in 2019, the lowest in the world.

The vacancy rate of downtown office units in Canada has risen since 2019, reflecting the drop in leasing activity due to the coronavirus (COVID-19) pandemic. In 2023, the share of vacant office real estate reached 18.3 percent, up from 10.9 percent in 2019. According to the forecast, this trend will continue in 2024. Among Canada's major office markets, Vancouver and Ottawa had some of the lowest vacancy rates.

The vacancy rate of offices in several Boston districts exceeded 20 percent in the third quarter of 2024, reflecting a lower demand compared to better performing districts, such as Fenway/Kennmore and Seaport. The highest office vacancy rate was recorded in North Station, where approximately 33.3 percent of offices were vacant and available for use. In Fenway/Kenmore district, the vacancy rate was 8.6 percent - the lowest in Boston. Black Bay, Boston's most expensive district for office leasing, had a vacancy rate of 18 percent.

This statistic shows the forecasted vacancy rates of office space in selected cities in the Americas in 2019. The average vacancy rate of office space in Vancouver, Canada is forecast to be 6.3 percent in 2019.

In the fourth quarter of 2024, Singapore's office vacancy rate was at 10.6 percent. The stock of office vacancy has decreased from the previous quarter.