Office Sector Metrics Turn South

US Office Market Performance

Source: Moodys Analytics

Plummeting lease activity in the office sector pushed vacancy rates to new heights in the fourth quarter of 2022. Occupied stock declined more than 7 million SF in the quarter, reversing what had been a relatively positive past 15 months. The vacancy rate is now 18.7 percent, a high water mark in our data. A combination of weakening economic conditions and remote work uncertainty has likely caused hesitancy in firms’ expansion plans, as well as prompting increasing amounts of space on the sublease market in an attempt to decrease operating costs. Given the current trend of “right sizing” for many tech firms, larger and more established tech markets continue to feel a bit more of the sector specific pain than many other markets throughout the country.

Thomas LaSalvia is director of Economic Research, Moody’s Analytics.