Apr 11, 2023 - Economy

Office space available for rent hits new record high

Data: CoStar; Chart: Axios Visuals
Data: CoStar; Chart: Axios Visuals

Office space available for lease in the U.S. is at a record high, according to data from CoStar.

Why it matters: Remote work is already crushing the office market, and the data is a sign that the distress is going to get worse — vacancies, already at historic highs, will likely go higher.

Details: Looking at office availability is different from looking at office vacancy rates. Availability doesn't just look at empty offices. It includes occupied office space where the tenant notified the landlord they won't be renewing.

  • And, crucially, availability takes into account leased office space where a tenant is trying to sublet the office.
  • For example, a company that no longer needs all the floors it leased before COVID will try to sublet the space to someone else. That's happening a lot now.
  • 13 tech companies in San Francisco have 3.5 million square feet of office space available for sublease, including Salesforce, Airbnb and Meta, according to data cited in the San Francisco Standard.

It's that last category — the amount of space available for sublease — that's jumped up in the wake of the pandemic.

  • Over the last three years it's been "piling up and up and up," said Phil Mobley, national director of office analytics at CoStar. "There's a strong likelihood that much of that is going to convert into vacancy when the original lease term expires."
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