U.S. Office Vacancies at Highest Rate in 40 Years, Providence Metro Area Performing Better

U.S. Office Vacancies at Highest Rate in 40 Years, Providence Metro Area Performing Better

The Wall Street Journal is reporting, “America’s offices are emptier than at any point in at least four decades, reflecting years of overbuilding and shifting work habits that were accelerated by the pandemic.”

In Rhode Island, data from the National Association of Realtors (NAR) shows overall better performance.

According to NAR, for the third quarter of 2023, “Demand for office space is stronger than nationwide as this [Providence-Warwick] area has a faster absorption of office space. Despite strong conditions, rent prices rose slower than nationwide. However, the vacancy rate is lower in this area."

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Nationally, the numbers are less stable and going in the wrong direction.

"A staggering 19.6% of office space in major U.S. cities wasn’t leased as of the fourth quarter, according to Moody’s Analytics, up from 18.8% a year earlier. That is slightly above the previous records of 19.3% set in 1986 and 1991 and the highest number since at least 1979, which is as far back as Moody’s data goes," reports WSJ.com.

The data points to much of the blame on the changed workplace caused by COVID and the rise of remote work. Zooms. Teams, and Skype meetings are in the conference room, and the catch-up is in the breakroom.

The vacancies are making financing very difficult for office building owners.

"The office sector’s credit crunch is intensifying. By one measure, it’s now worse than during the 2008-09 global financial crisis," reported the WSJ in November. "Only one out of every three securitized office mortgages that expired during the first nine months of 2023 was paid off by the end of September, according to Moody’s Analytics."