Office vacancy rate hits record high
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Office vacancy rates reached a record 20.1% in the second quarter — the highest since at least 1979, when Moody's began tracking.
Why it matters: Typically vacancy rates rise in economic downturns; it's outside the normal pattern that they've been going up for the past few years as the economy has remained on solid ground.
Zoom out: Of course, offices are sitting empty because the pandemic seems to have permanently changed the way many Americans work, and companies don't need as much space as they once did.
State of play: Long-term leases are taking a long time to unwind, says Moody's associate economist Nick Luettke.
- And these vacancy rates are likely to continue to climb for the next few years, peaking at the end of 2026, per Moody's projections. If the economy moves into a downturn, things could get even worse.
The bottom line: There's "just going to be pain over the next coming years," he says.
