The office vacancy rates in Atlanta and San Franciso have soared past 30% as companies increasingly embrace hybrid and remote working models.
Atlanta has seen more than 2.2 million square feet of office leases signed in the first quarter of 2024. That is the most activity recorded in Atlanta's office market since the COVID-19 pandemic hit in 2019, forcing many companies to shift to a remote or hybrid working model.
Despite the increase in new leases, however, 32.4% of all office square footage in Atlanta remains vacant, according to estimates from commercial real estate firm CRBE. The office vacancy in the Downtown Atlanta submarket accounted for more than 50% of the city's total vacated space.
Similarly, the office vacancy rate in San Francisco increased to 36.7% in the first quarter of this year from 35.6% in the last four months of 2023. However, the report noted that the rate of increase in office vacancies in the city has slowed.
Broken down into specific areas, Yerba Buena had the highest office vacancy rate in the city at about 57%, while Civic Center/Van Ness had the smallest, at around 27%.
The firm expects the office vacancy rate in San Francisco to continue increasing and hit its peak in the next few quarters.
National Office Vacancy
Nationally, office spaces are now emptier than at any point in over four decades. At least 19.6% of all office spaces in major cities in the U.S. were vacant in the last quarter of 2023, the highest rate recorded since 1979, according to Moody's Analytics' Q4 2023 Preliminary Trend announcement.
In comparison, the average office vacancy rate before the COVID-19 pandemic struck was around 16.8%.
The three cities with the highest vacancy rate in the U.S. are all in the state of Texas, specifically Austin, Dallas, and Houston.
The surplus of office space in the U.S. is mainly due to the massive shift to hybrid or remote work. It also followed an overabundance of supply in the office market following a construction boom in the 1980s and the 1990s.
