Remote Work and the U.S. Office Vacancy Crisis: How Hybrid Trends Drove Record Vacancies

The Post-Pandemic Office Vacancy Crisis in Context

In late 2023, the office vacancy crisis in the United States reached an unprecedented level. The national office vacancy rate surged to 19.6% in Q4 2023, the highest on record since tracking began in 1979. This means nearly one-fifth of all office space sat empty – a stark jump from the ~16.8% pre-pandemic vacancy average. The primary culprit is the rise of remote and hybrid work. As millions of employees continue to work from home part-time or full-time, offices remain underutilized. In major cities, office attendance has stabilized at only about 65–70% of pre-COVID levels on peak weekdays. Tuesdays through Thursdays see modest crowds, but many desks go unused on Mondays and especially Fridays, reflecting the new hybrid workweek. This structural shift in work habits – fewer people coming in daily and companies embracing flexible schedules – has left a glut of office space with too few occupants.

Compounding the issue, many companies have responded by downsizing their office footprints. During lease renewals, tenants frequently opt to sublease or give up excess space rather than pay for half-empty offices. National surveys confirm this downsizing trend: nearly 48% of corporate real estate decision-makers plan to decrease their office space in the next few years (while only 27% plan to expand). In practice, this means consolidating floors, moving to smaller offices, or not renewing leases at all. Even as some high-profile employers issue return-to-office mandates, overall office utilization remains far below 2019 levels. The result is a tenant’s market – companies have leverage to demand concessions or higher-quality space, and landlords scramble to fill vacancies. Class A office towers with modern amenities are outperforming older buildings, as tenants gravitate to “flexible or smaller configurations” in top-tier properties for branding, collaboration and training needs. In contrast, dated buildings with traditional layouts are seeing an outsized share of vacancies. In short, remote work and hybrid policies shattered the status quo of office demand, creating a surplus of space and a nationwide office vacancy crisis that shows no quick fix.

Downsizing, Reduced Occupancy, and the RTO Debate

Tenant demand for office space has fundamentally shifted since 2020. Many organizations have downsized – not due to business contraction, but by design, to align with hybrid work patterns. If only 60–70% of staff are in on typical days, companies simply don’t need as much space. A common strategy is “hoteling” or seat-sharing: instead of assigned desks for every employee, workers rotate through shared workstations. Nearly 70% of companies have now adopted seat-sharing, and 90% plan to expand its use. This allows firms to cut square footage, which saves on rent and overhead. Big employers from tech to finance have shed millions of square feet collectively, either subleasing it out or leaving older offices altogether. The downsizing is evident in market statistics: by mid-2025 U.S. office occupancy (physical usage) was still roughly one-third below pre-pandemic norms, even as employment rebounded. In Midtown Manhattan, for example, office foot traffic plateaued at about 65–70% of 2019 levels – enough to prevent a “ghost town,” but far from a full house.

These patterns fuel the ongoing return-to-office (RTO) debate. Executives cite collaboration and culture as reasons to bring people back, while employees point to productivity and work-life balance at home. The push-pull has led to hybrid compromises (commonly 2–3 days in office). By 2023, the average U.S. employee was coming in about 3.1 days per week, up from near-zero in 2020, but not the pre-2020 norm of 5 days. Some firms have mandated more in-person days – and indeed office attendance has inched up – yet office occupancy remains well below capacity. Even with more assertive RTO policies in 2024, experts doubt it will significantly boost demand for new office space so long as vacancy rates stay high. IBISWorld’s analysis of land development trends notes that the flurry of return-to-office mandates “will not likely greatly boost new office building construction” given persistently elevated vacancies. In other words, forcing a few extra commute days won’t suddenly refill tens of millions of empty square feet. Many companies have settled into a leaner office usage model, and any future growth in space needs may be offset by continued efficiency gains (like more employees per square foot under hoteling). The RTO debate, while symbolically important, has so far produced only incremental changes on the margins of a much larger structural shift.

Record-High Vacancies Reshape Commercial Real Estate Economics

The economic ripple effects of this office vacancy crisis are profound. Commercial real estate (CRE) economics have been upended by the collapse in office demand. With 19–20% of U.S. office space vacant nationwide, landlords face intense pressure to attract tenants. Effective rents have stagnated or fallen in many markets as owners compete on price and perks. Generous concession packages (free rent months, bigger improvement allowances) are now commonplace to lure leases. For older Class B/C office buildings, the situation is especially dire – many are at risk of becoming “ghost office buildings” with chronically low occupancy. Moody’s Analytics foresees the vacancy rate “hover around 20%”and warns of potential obsolescence for countless office properties in weaker locations. As one Moody’s economist put it, “change is upon us, and often change is messy,” predicting some offices may turn into the empty malls of yesteryear.

For landlords and investors, high vacancy means declining asset values. In key markets like New York City, the assessed value of office buildings fell by about 16% (a $29 billion drop) from 2021 to 2025, contributing to an estimated $1.16 billion tax revenue shortfall for the city. Office properties that were once secure, income-producing investments have become riskier bets for banks and owners. Refinancing is more difficult, and building owners with heavy debt are feeling the squeeze of rising interest rates on top of empty floors. Even REITs and institutional investors are rebalancing portfolios away from traditional office assets. Nationwide, the office sector’s slump is now affecting municipal finances as well. The Federal Reserve cautioned in mid-2025 that weakness in commercial real estate (especially offices) poses risks to local tax collections. Cities heavily reliant on commercial property taxes are already seeing dips: New York’s office property tax take fell ~1.5–1.7% in 2024–25, and Washington D.C. expects office-building tax receipts to drop nearly 10% in 2025 and 11.7% in 2026. In short, the office glut translates to budget headaches for city governments, which may have to cut services or find new revenue as downtown valuations slip.

Developers, too, are recalibrating. New office construction has been curtailed dramatically – in some areas, development pipelines have ground to a halt, as building more offices in an over-supplied market makes little sense. By early 2024, U.S. office construction activity was at its lowest level since 2012. Land development businesses that thrived on preparing sites for office parks are pivoting focus to other project types. According to IBISWorld, the land development industry did manage to grow about 6.2% annually from 2020 to 2025, reaching $22.9 billion in revenue, but this growth was driven largely by residential and industrial projects. High office vacancies “pushed down new office building construction,” hindering land developers’ opportunities in that segment. Instead, developers are chasing hotter markets like warehouses, data centers and life-science labs – or repurposing old office sites for mixed-use. IBISWorld analysts note that hotels and data centers are expected to drive much of the upcoming commercial construction growth, while office construction will continue to lag in the foreseeable future. Essentially, capital and construction crews are flowing to where demand is – and right now, that’s anywhere but building new offices. This realignment has long-term implications: the traditional downtown business district may evolve with fewer pure office towers and more diversified property types going forward.

Adaptive Reuse: The Rise of Office-to-Residential Conversions

One silver lining of the office surplus is a boom in adaptive reuse – creatively repurposing underused offices into new facilities, especially housing. Across the country, developers and city planners are increasingly pursuing office-to-residential conversions as a win-win solution: it helps absorb excess office inventory and addresses housing shortages in urban centers. The scale of this trend is growing fast. As of early 2024, roughly 70 million square feet of U.S. office space (about 1.7% of total inventory) was undergoing conversion to other uses, up from 60 million sq. ft. just a few months prior. In fact, office-conversion projects doubled their pace – an estimated 120 projects are slated to complete in 2024, compared to an annual average of 45 in the 2016–2023 period. Hundreds more are in planning stages, signaling that many downtown skylines will be irrevocably changed in the next few years.

Crucially, the majority of these conversions are targeting multifamily residential use. CBRE data show about 63% of all office square footage being converted is turning into apartments or mixed-use residential projects. Since 2016, completed office-to-apartment conversions have already created over 22,000 new housing units, and the pipeline of projects underway is expected to deliver another 31,000 apartments in the coming years. These numbers are still small relative to total housing need (the new units amount to <0.5% of U.S. apartment stock), but they mark a significant pivot in land use. Cities like Cleveland have been pioneers – downtown Cleveland converted more than 3.5 million sq. ft. of obsolete offices into other uses since 2016, reducing its total office inventory by 18% and cutting the vacancy rate from 19.7% to 17.3%. Other top markets for conversions include Houston (with over 6 million sq. ft. in conversion), Philadelphia, Chicago, and New York – notably, eight of the ten most active conversion markets had office vacancy rates above the 18.6% U.S. average as of late 2023. High vacancies clearly motivate more aggressive reuse initiatives.

City governments are encouraging this wave through policy incentives. For example, Boston launched an office-to-residential conversion program in 2023, even setting aside an additional $15 million in 2024 to sweeten incentives for developers who convert older office buildings. Numerous municipalities are expediting permits, relaxing zoning where feasible, or offering tax abatements to make conversions viable. The rationale is straightforward – an occupied apartment building is far better for urban vitality (and tax rolls) than a derelict office tower. However, conversions are no panacea for city budgets. Many cities tax commercial properties at higher rates than residential, so when an office building becomes apartments, the property tax revenue often drops even if the building is full of residents. Policymakers recognize the tradeoff, but many are willing to accept a moderate tax hit in exchange for preventing blight and meeting housing demand.

From an urban land use perspective, the rise of adaptive reuse points toward a more mixed-use future for downtowns. Areas once dominated by 9-to-5 office workers are slowly evolving into 18-hour neighborhoods with more housing, hotels, colleges, medical facilities, and entertainment venues occupying former office blocks. Planners are reimagining central business districts as “live-work-play” communities, where a diversified real estate mix can better withstand economic swings. The office vacancy crisis has, in effect, accelerated a transformation that urbanists have long discussed. Still, conversions can be complex and costly – not every empty office is easily turned into apartments due to design constraints (floor plate sizes, window access, etc.). Success stories so far tend to involve older, smaller office buildings that fit residential layouts. Going forward, we may see new innovation in architectural strategy to retrofit larger, more modern offices for alternative uses. Engaging professional planning and design expertise early is crucial to navigate these challenges. (For example, partnering with an experienced site planning team like InnoWave’s site plan servicescan help ensure that potential conversions or redevelopment of office sites are carefully evaluated and optimized for regulatory compliance and market needs.) By leveraging such expertise, landlords and developers can identify the best reuse options for struggling properties – whether that’s converting to housing, hotels, schools, or even indoor vertical farms – and bring new life to dormant offices.

Office Design Trends: Remodeling for Flexibility Over Tradition

Not all surplus office space will be converted or sit empty indefinitely – a significant share is being reimagined and remodeled for the new way of work. For companies that maintain an office presence, the post-pandemic priority is making those spaces more engaging, flexible, and efficient. This has driven a shift in architectural strategy for workplace design. Gone are the days of dense cubicle farms and excess private offices; today the emphasis is on open, adaptable layouts that can flex with hybrid schedules. Many employers are investing in collaborative hubs, multipurpose lounges, and enhanced video conference rooms to support a hybrid workforce. Early hybrid workplace initiatives often reduced the number of individual workstations and increased collaborative and social areas, with the side effect of shrinking the overall footprint needed. The idea is that when people commute in, it’s primarily for teamwork and face-to-face interaction – so the environment should facilitate that, rather than rows of isolated desks. At the same time, companies learned that an over-correction toward open plan can backfire; employees still need quiet, private areas for focus work. The latest designs strive for balance: a variety of spaces (conference rooms, huddle pods, phone booths, cafe-style zones, etc.) that employees can choose from, depending on their tasks. Flexibility is key – modular furniture and demountable partitions allow reconfiguring space on demand. In essence, the modern office is being treated as a flexible service, not a fixed asset – something to be continually tuned to organizational needs and employee preferences.

This paradigm shift is influencing the commercial property remodeling industry. Office remodels are now less about lavish executive offices or large-scale build-outs, and more about retrofitting for agility and experience. For instance, landlords are carving out amenity spaces like tenant lounges, fitness centers, and roof decks to entice workers back. Older HVAC systems are being upgraded for better air quality, and touchless technologies installed to improve health and convenience. Yet despite these trends, the overall demand for traditional office remodeling has softened. According to IBISWorld, the market size of the Commercial Property Remodeling industry (which includes office renovations) declined slightly, at an annualized –0.6% from 2020 to 2025. In 2026 the U.S. commercial remodeling market is expected to hover around $39.9 billion, reflecting how pandemic disruptions paused many office improvement projects. With high vacancies, some landlords postponed non-essential upgrades; why spend heavily to remodel space that might remain empty? On the other hand, a subset of office owners is proactively repurposing and redesigning spaces to be more “hybrid-friendly.” These forward-looking renovations focus on flexible layouts and modern office design elements – for example, adding movable walls that can create meeting rooms on mid-week peak days and open up space on low-occupancy days, or transforming underutilized areas into co-working style environments that can be leased to multiple smaller tenants. Industry data suggests this pivot to flexible design will drive a modest rebound in remodeling: IBISWorld forecasts the commercial remodeling industry will return to growth over the next five years, as stakeholders invest in adapting buildings to the new normal.

From an architect’s standpoint, designing for the hybrid era means embracing uncertainty and change. Workplaces must be multi-functional and resilient. Considerations like advanced IT infrastructure (for seamless virtual meetings) and employee well-being (natural light, acoustics, comfortable furniture) are at the forefront. Many businesses now involve architects and space planners early when considering downsizing or relocating, to ensure the new office layout can do “more with less.” A well-known pattern is emerging: fewer dedicated desks, more shared spaces, and an environment that employees actually want to commute to. In other words, the office must earn its keep as a compelling destination. This is leading to creative design solutions – from “resimercial” interiors that blend homey comfort with office functionality, to inclusion of spaces like meditation rooms or casual collaboration nooks that make the workplace more inviting. Flexible workspace design is not just a trend but a necessity in the face of the office vacancy crisis; buildings that cannot offer adaptability and an enhanced user experience risk falling further into disuse. As a result, architects and interior designers are critical allies for landlords trying to reposition their properties. Some offices are effectively being rebranded as flexible event and collaboration centers for occasional use, rather than daily production floors. This kind of reprogramming often requires substantial interior remodeling – but notably, it tends to favor selective “light-touch” renovations (what JLL calls *“pocket” renovations) over gut rehabs, given budget constraints. Small interventions like adding soundproof phone booths, upgrading furniture, or creating a cozy lounge can yield disproportionate improvements in occupant satisfaction without massive expense. In summary, the future office is smaller, smarter, and more user-centric, and the design and remodeling industry is evolving to deliver exactly that.

Workforce Impacts: Staffing Agencies and a Changing Office Labor Market

The turbulence in office usage has also reverberated through the employment and staffing landscape. As companies recalibrate how and where work gets done, many are also rethinking how they staff their operations. In an uncertain environment – with economic swings and flexible work arrangements – businesses have leaned more on temporary and contract labor to stay agile. This has been a boon for the Office Staffing & Temp Agencies industry, which rebounded strongly after the initial pandemic shock. According to IBISWorld, the U.S. staffing and temp agency market grew at about 2.9% annually over 2020–2025, reaching an estimated $260.1 billion in revenue in 2025. In fact, coming out of the 2020 downturn, staffing firms saw consecutive years of record growth as companies turned to them to fill gaps quickly in a tight labor market. Employers facing hiring challenges and unpredictable demand found value in the flexible workforce solutions that staffing agencies provide. This trend aligns with the broader hybrid work shift: just as firms don’t want excessive fixed office space when utilization is variable, they also don’t always want fixed permanent headcount for roles that might be handled on a project or as-needed basis.

One direct impact of widespread remote work was that geography became less of a barrier for some jobs – companies could tap talent anywhere. Staffing agencies capitalized on this by widening their candidate pools and offering remote placements. At the same time, certain traditional office support roles experienced upheaval. For instance, if a company downsized its offices, it might need fewer receptionists, mailroom staff, or on-site IT support. Some of those jobs were eliminated or moved to external service providers. However, new needs have emerged: companies now seek more IT contractors to manage distributed work setups, HR consultants to devise hybrid work policies, and workplace coordinators on a flexible basis to handle the ebb and flow of office usage. In many cases, these positions are filled through staffing firms rather than full-time hires, especially as firms “try before they buy” in a shifting environment. The temp agency industry’s resilience underscores that the nature of office employment is changing, not disappearing. In a tight labor market, staffing agencies also played a vital role in sourcing talent for sectors experiencing shortages (e.g. tech, healthcare). This helped offset weakness in purely office-centric placements. The net effect is that the staffing sector has become an integral support system for the evolving world of work: agencies help companies stay nimble with just-in-time hiring, and help workers find opportunities that may be temporary or remote-friendly.

Notably, even as the Fed raised interest rates in 2022–2023 and the economy cooled, staffing revenues have held up relatively well – IBISWorld estimated a nearly 8.9% jump in industry revenue in 2025 alone, before moderating in the following years. This suggests that, beyond cyclical ups and downs, there is a structural demand for workforce flexibility. Employers navigating the office vacancy crisis and hybrid work often prefer to scale teams up or down without long-term commitments, and staffing firms enable that strategy. From a worker perspective, attitudes are changing too: some professionals enjoy the freedom of contract work, especially if they can do it remotely, and are less inclined to settle into one office-bound employer. The growth of remote job platforms and freelance marketplaces dovetails with the staffing industry’s offerings. In summary, the office sector’s challenges have, somewhat counterintuitively, reinforced the value of temporary staffing. As one analysis put it, the industry has “thrived by offering agile staffing solutions to corporate clients, despite a volatile economic environment”. Going forward, staffing agencies are expected to remain a fixture of corporate strategy. IBISWorld projects continued modest growth (around 2.2% CAGR through 2030) for the staffing sector as the economy expands and more workers re-enter the labor force seeking flexible roles. In the long run, a more fluid office labor market – with a mix of core employees, remote contractors, and on-call specialists – could become the norm, mirroring the fluid use of office space itself.

Implications and Outlook for Landlords, Developers, and Cities

The remote work-driven office vacancy crisis is not a temporary hiccup, but a transformative event with lasting implications for all stakeholders in commercial real estate. Landlords have learned that relying on a full floor of long-term tenants is no longer a given. Many are diversifying their tenant mix (welcoming co-working operators, pop-up uses, or educational and medical tenants into office buildings) to reduce risk. Property owners are also being more proactive in investing in their buildings’ appeal – from energy-efficient upgrades to concierge services – to retain the occupants they have. Those who can’t adapt may face painful choices: already, we’ve seen instances of owners defaulting and handing over distressed office towers to lenders at a fraction of their previous value. This trend could continue, especially for buildings that are aging and cannot easily be upgraded or converted. However, where one investor sees distress, another sees opportunity. Value-add investors and developers are eyeing underperforming office assets as prime candidates for redevelopment – whether conversion to new uses or dramatic renovation. As a Moody’s analyst noted, the current climate will “expose some very good opportunities” for those who are vigilant and detail-oriented in assessing properties. We may witness a wave of building repositionings in the coming years, effectively weeding out the weakest stock and reinventing portions of the office landscape.

For developers, the challenge and opportunity lie in anticipating the next phase of urban evolution. Ground-up office construction won’t vanish entirely – there will still be new office demand in select markets (especially Sun Belt cities with job growth, or niche projects like high-end boutique offices). But developers must be cautious and strategic. Mixed-use development is likely to be the prevailing theme: instead of pure office towers, many new projects incorporate a blend of office, residential, retail, and hospitality components to create self-contained ecosystems. This spreads risk and aligns with cities’ goals of vibrant 24/7 districts. Land development firms are increasingly steering their efforts toward residential subdivisions, industrial parks, and infrastructure projects, as these offer more reliable returns than speculative office ventures in the near term. The ones that do engage in office projects will focus on future-proofing them – e.g., designing with extra flexibility for conversion down the road, or choosing locations with extraordinary appeal (transit hubs, waterfronts, etc.) that give offices a fighting chance. It’s telling that even as some CEOs insist on in-person work, major corporations are also expanding their hubs in lower-cost cities or suburban campuses to accommodate hybrid workers who fled dense downtowns. Developers who cater to these shifting preferences (for example, building satellite offices in amenity-rich suburban nodes) can capitalize on the dispersion of office demand.

Municipalities and local governments have perhaps the most complex role to play. They must navigate a delicate balance: on one hand, filling vacant offices and revitalizing downtown economies, and on the other, maintaining fiscal stability as property tax dynamics change. Cities are innovating with carrots and sticks – from tax incentives for conversions to exploring vacancy taxes that penalize long-term empty properties (as a way to prod owners into action). Some are adjusting zoning laws to make it easier to convert or to allow more diverse uses in former office zones (for instance, permitting lab space, schools, or residential in areas once zoned commercial-only). We are likely to see more public-private partnerships as well – for example, cities might co-invest in converting a derelict office block into affordable housing or a community college extension, seeing it as a public good. There is also a broader urban planning conversation underway about transportation and infrastructure: if fewer people commute to central offices daily, how should transit systems and downtown businesses adapt? In cities like San Francisco and New York, transit ridership and downtown retail rely heavily on office workers, so prolonged hybrid work could mean those systems need to right-size or reinvent their service models. Municipal leaders are therefore not only looking at real estate incentives but also at programming and placemaking – hosting events, improving public spaces, and finding other draws to bring people into city centers beyond just work. The future city center might feature more arts, culture, and residential life to compensate for the reduction in 9-to-5 office activity.

In sum, the rise of remote and hybrid work has permanently altered the calculus for offices. The current office vacancy crisis – with its record-high vacancies and downsized demand – is forcing an overdue evolution in commercial real estate. While the adjustment period is painful for some, it’s also sparking creativity: businesses are rethinking how they use space, architects are redefining the modern workplace, and cities are reimagining their cores for greater resilience. Landlords, developers, and municipalities that proactively embrace these changes – by investing in flexibility, repurposing proactively, and working together on solutions – will be best positioned to thrive in this new era. The office isn’t going extinct; it’s being redefined. Just as the post-industrial age gave birth to the skyscraper office downtown, the post-pandemic age may give rise to a new kind of urban landscape – one where offices exist, but in a more right-sized, repurposed, and integrated form within our cities and communities. The road ahead will require adaptation from all parties, but those adaptations are already unfolding, turning crisis into opportunity in the long run.

References:

1. Tietz, K. (2024). America’s offices are the emptiest they’ve been in at least four decades, according to report. Fox Business. National office vacancy hit 19.6% in Q4 2023 – a record high driven by remote work. Pre-pandemic vacancy averaged ~16.8%.

2. Lieberman, M. D. (2025). Midtown Manhattan’s Skyscraper Ecosystem: Numbers Behind the Small Business Shakeout. Statistically Speaking (Substack). Reports Midtown office occupancy ~65–70% of pre-pandemic levels by 2025 with a Tue–Thu core workweek. Highlights sustained hybrid work patterns.

3. JLL Global Occupancy Planning Benchmarking Report (2024). Cited in: Molinini, L. Four ways to refresh the office for hybrid working. JLL Insights. Nearly 48% of companies plan to decrease office portfolios (vs 27% increase) over 3–5 years. ~70% have adopted seat-sharing, reflecting widespread downsizing and space optimization.

4. IBISWorld Industry Report 167: Land Development in the US (2025). Industry revenue grew ~6.2% annually 2020–25 to $22.9 bn. Notes remote/hybrid work led office vacancies to ~19.4% in mid-2025 (down from >20% in 2024), suppressing new office construction and hindering land developers. Even with RTO mandates, high vacancy will keep new office builds low.

5. IBISWorld Industry Report 6085: Commercial Property Remodeling in the US (2025). The commercial remodeling market (incl. office fit-outs) **declined at –0.6% CAGR from 2020 to 2025】, with 2026 market size around $39.9 bn. Indicates reduced traditional remodeling demand amid high office vacancies.

6. IBISWorld Industry Report 1464: Office Staffing & Temp Agencies in the US (2025). Industry thrived post-2020 by filling recruitment gaps; revenue grew ~2.9% annually to $260.1 bn in 2025, with consecutive years of record growth after the pandemic. Temp staffing became crucial for flexibility in a tight labor market and hybrid work environment.

7. CBRE Research (Q1 2024). Office Conversions Underway to Revitalize Downtowns. Nearly 70 million sq. ft. of offices (1.7% of U.S. supply) were undergoing conversion to other uses in early 2024, up from 60 million (1.4%) in late 2023. Office-to-residential is 63% of this pipeline, with 120 projects expected in 2024 vs ~45/year pre-pandemic. Top conversion markets correlate with high vacancy (e.g., Cleveland converted 3.5 M sq. ft., cutting vacancy from 19.7% to 17.3%).

8. Scolca, T. (2025). Where Office-to-Resi Conversions Are Growing Most—and Why. Multi-Housing News. Citing RentCafe data: 168,500 residential units in conversion pipeline nationwide (early 2025), 70,700 of which from office buildings. Highlights cities (Boston, Jacksonville, Omaha, Charlotte) with surging office-to-housing projects and new incentive programs.

9. Bhattarai, A. (2025). Post-pandemic office slump is now hitting cities’ tax coffers. The Washington Post. Office vacancies ~20% in Q2 2025 across all regions. NYC office property values fell ~16% (2021–25), causing ~$1.16 bn annual tax shortfall. D.C. expects office property tax revenue to drop 9.8% in 2025 and 11.7% in 2026 due to rising vacancies. Boston, NYC, DC exploring conversions and other measures as commercial assessments fall.

10. Moody’s Analytics / Cushman & Wakefield (via Fox Business, 2024). Analysts note this office downturn may be longer-lasting due to permanent remote/hybrid shifts, unlike early 1990s which rebounded with economic growth. Companies adopting open layouts and cost-cutting have contributed to vacancies, accelerated by COVID-19. Tenants now favor Class A offices with flexible, smaller configurations, keeping a footprint only for specific purposes (branding, collaboration). Suburban offices also faring relatively better due to shorter commutes.