As the office rental market evolves, Phoenix has experienced a notable increase in office vacancy rates. With remote and hybrid work becoming more common, companies are adopting flexible work-from-home models, which has decreased the demand for office space, leading to higher vacancy rates in several markets.

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A recent study by Outsource2india reveals that Phoenix’s office market is facing significant challenges, with vacancy rates on the rise. Using data from the National Association of Realtors, we analyzed the office rental market across major U.S. metropolitan areas and tracked changes in office rent from 2023 to 2024.

Phoenix Findings:

  • Phoenix ranks No. 8 among the top 10 metropolitan areas for the highest office vacancy rates, with 16.1%.
  • Since 2023, the city has seen a 9.5% growth in vacancy rates.
  • In terms of total vacant office space, Phoenix lands at No. 7 with the equivalent of 548 football fields of empty offices. 

In the study by Outsource2india on the office rental market, metropolitan area in Texas and California dominate the list of top 10 cities with the highest vacancy rates. San Francisco leads with a staggering 21.7% of vacant office space, highlighting significant challenges in its commercial real estate sector.

Key takeaway

  • Metropolitan areas in Texas and California, particularly San Francisco, lead the list of top 10 metropolitan areas with the highest vacancy rates in the office rental market. San Francisco stands out with a 21.7% vacancy rate.
  • Over the past year, major metropolitan areas like San Jose and San Francisco have seen alarming increases in vacancy rates, with San Jose experiencing a 27.9% increase and San Francisco a 26.9% increase.
  • When considering total vacant square footage, Washington leads with the equivalent of 1520 football fields of vacant offices.

Empty Offices in California and Texas

Data from the National Association of Realtors (NAR) for the first quarter of 2024 reveals that San Francisco stands far ahead of other metropolitan areas, with more than one out of every five offices vacant. Following closely are Houston (18.6% vacancy), Dallas (18%), and Austin (16.7%), all located in Texas. The top 10 list is completed by two other Californian metropolitan areas, Los Angeles (16%) and San Jose (15.6%). These figures underscore the widespread struggles faced by major cities in managing high vacancy rates in their office markets.

Top 10 areas with the highest vacancy rates