Skip to content

Office Vacancy Rates 2022 Report

The commercial real estate market is ever-changing, and office vacancy rates are no exception. In just a few short years, the pandemic has caused a major shift in the way people work—and that shift is likely to continue in the years to come. So, what does the future of commercial real estate mean for office vacancies and real estate trends? Here’s a look at what experts are predicting for the future of office space

office vacancy rate

What is the standard office vacancy rate?

In the United States, office vacancy rates increased to an average of 12.3% in 2020. Primarily due to the impacts of coronavirus, employees moved away from traditional offices and adopted a work-from-home (WFH) or a hybrid work model.  

With these changes happening across most industries all at once, it is no wonder why the office vacancy rate is so high.  

What is the most important thing the vacancy rate indicates?

A rising vacancy rate is one of the most important indicators to consider when considering real estate. Expressed as a percentage – the vacancy rate is an economic indicator that measures the percentage of vacant rentals. 

Higher vacancy rates indicate the following:

  • A high level of vacant units 
  • Low level of occupancy
  • Lack of demand
  • High vacancy rates will often result in lower rents due to a supply-demand imbalance.

Low vacancy rates, on the other hand, indicate the following:

  • Low level of vacant units
  • High level of occupancy
  • Increased demand
  • Low vacancy rates will often result in higher demand, mainly due to scarcity.
office space vacancy rate

How does the 2022 office vacancy rate look compared to 2021?

As of July 2021, the office vacancy rate in the United States was 10.1%. In 2020, the office vacancy rate was 12.3%.  While it appears trending in the right direction, this is still a significant increase from the 8.6% vacancy rate recorded in 2019, and the trend is expected to continue into 2022.

The pandemic has profoundly impacted the office market over the past two years, with more companies working remotely or downsizing. As a result, there is expected to be a glut of commercial real estate in the coming year. Landlords are expected to offer significant discounts to entice tenants, and there is likely to be an increase in vacant properties.

However, despite the challenges posed by the pandemic, the office market is expected to recover in the long term. Many companies plan to expand or relocate their operations, and the demand for office space is expected to increase as the economy recovers. As such, while the office vacancy rate is expected to improve in the short term, it is predicted to return to pre-pandemic levels within a few years.

In Conclusion

There is no doubt the pandemic has had a profound impact on the office market. While the market is expected to recover in the long term, as strongly indicated by vacancy rates improving year-over-year.  There lies a great opportunity for contrarian investors amongst this fear-mongering.  Furthermore, we believe that more companies will plan to expand or relocate their operations, and the demand for office spaces and the cost to rent is expected to increase as the economy recovers.

About The Author

Jesse Shemesh

With a wealth of experience in nurturing diverse commercial real estate investment portfolios across multiple markets, I actively engage in the development and execution of deals spanning all asset classes. My expertise lies in collaborating with strategic partners, including corporate real estate professionals, fund managers, developers, and investors, to source, identify, and entitle opportunities. At Point Acquisitions, we take pride in our unique, proprietary platform that specializes in property acquisitions, generating a steady stream of organic deal flow that sets us apart from the competition. As a seasoned professional in the real estate industry, I am dedicated to creating lasting partnerships and delivering exceptional results for all stakeholders.
Seller financing

What is Seller Financing in Commercial Real Estate

March 6, 2023

If you want to purchase commercial real estate, seller financing might be just what you need. But what is seller financing? And how can it help you in your search for the perfect property? Let’s examine what seller financing is…

Read More
irr levered vs unlevered

Maximizing Your CRE Returns: IRR Levered vs Unlevered Explained

February 27, 2023

As a commercial real estate seller or investor, you know that generating high returns is essential to your success. That’s why understanding the Internal Rate of Return (IRR) concept is crucial. IRR is an essential metric that helps you evaluate…

Read More
Commercial real estate loan requirements

Commercial real estate loan requirements: A Full Guide

February 16, 2023

If you’re looking to invest in commercial real estate, securing financing is one of the most important steps you’ll need to take. Commercial real estate loans can be complex, and the requirements can vary depending on several factors, including the…

Read More