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The U.S. office market has been in a tailspin since the start of the pandemic, when workers were first ordered home. Some, especially younger workers, never came back — leaving many office buildings half full or empty.
The overall vacancy rate for offices, however, fell 20 basis points in the third quarter to 18.8%, according to CBRE. While that’s still historically high, it marks the first year-over-year decline in vacancy since the first quarter of 2020, when Covid took hold in the U.S.
Leasing activity last quarter exceeded the five-year quarterly average, driven by financial services and technology firms, according to the report. The construction pipeline also dropped and is on track for the lowest annual total in over a decade.
“I definitely think we hit bottom. I think we hit bottom in 2024,” said Owen Thomas, CEO of BXP (formerly Boston Properties), the largest office REIT in the U.S. “There are lots of positive things that are going on for part, not all, of the office business.”
