October Office Market Stats: Vacancy at 19.5%, Sale Prices Tumble
In October, office market stats and utilization levels remained mostly flat, despite headline-grabbing decisions by several companies to boost return-to-office mandates, as reported by commercial real estate (CRE) listing network CommercialEdge.
For instance, Kastle’s Back to Work Barometer, which tracks office badge swipes to calculate office attendance, posted an occupancy level of just above 51% for most of the year. Additionally, Kisi Access Control — a company that tracks office attendance through aggregated office unlocks — reported an average office occupancy of just more than 50% for the week ending September 30.
While attendance has ticked up slightly since then to reach 51.7%, the rate is still below expectations given recent return-to-office mandates by several high-profile companies. Namely, Amazon, Dell, and Meta have all announced measures either encouraging or outright requiring office attendance in the near future.
States with the highest office attendance rates include Illinois (56.1%), Texas (54.7%) and Florida (53.2%). Meanwhile, California (49.2%), Pennsylvania (47.8%) and New York (47.2%) had occupancy rates below the national average. Notably, Washington, D.C. posted an office occupancy rate of only 36.6%, which is to be expected given the prevalence of governmental offices in the market.
While companies are mostly pulling for a full return to the office, utilization levels paint a different picture for the future of hybrid and remote work. Specifically, CBRE reports that although the number of new office leases mostly matches pre-pandemic levels, the average square footage of new leases has dropped by more than one-quarter due to employee demand for remote work opportunities in combination with sluggish job growth in office-using sectors.
“As office physical occupancy data remains stubbornly low, it continues to magnify the problem that we have too much office space: Roughly 20% of the 7 billion square feet remains empty.”
– Peter Kolaczynski, Director, CommercialEdge
National Listing Rate Rests at $32.89 per Sq. Ft., Sale Prices Tumble to $171 per Sq. Ft.
After an increase of $0.11 from the previous month, the national average full-service equivalent listing rate stood at $32.89 per square foot in September. In particular, following a 3% decrease since last year, Manhattan, N.Y., still records the highest listing rate at $67.93 per square foot, almost tied by San Francisco’s $67.32. Then, Boston office space completes the podium with an average rate of $58 per square foot.
Incidentally, Boston also recorded the largest 12-month increase in listing lease rate by jumping 26.4% since September 2023. Other markets with double-digit price hikes included Miami offices (up 16.3% to reach $52.87 per square foot); Orlando, Fla. (up 13.4% to $27.57); and Dallas (up 12.3% to $30.64).
Otherwise, nine markets recorded decreases in average asking rates year-over-year, including Seattle (-7.1% to $35.17); Portland, Ore. (-5.6% to $27); and Chicago (-3.8% to $27.04).
Switching over to sales, a total of $23.8 billion changed hands so far this year in office transactions, resulting in an average price per square foot of $171. CommercialEdge also reports that many properties are selling for discounted prices with some markets (such as the Chicago office market) seeing drops of more than 50% in average sale prices.
Year-to-date, Manhattan leads the list of total office sales volume with $2.7 billion, followed by D.C.’s $2 billion and the Bay Area’s $1.8 billion.
For more information and a complete breakdown of the data, check out CommercialEdge’s original report.