Office Sector Vacancy More Nuanced Than Previously Thought
Completely dismissing office space as a substantially devalued asset class would be a hasty judgment. Although vacancy is up across the national office market, it's important to understand that not all properties suffer the same fate. Compared to their larger counterparts, smaller office buildings are exhibiting greater resilience in today’s era characterized by the changing norms of hybrid work.
A fascinating pattern emerges through thorough analysis of office space stratification by size, including skyscrapers over 20stories, medium-sized buildings with 6-20 stories, and small offices sized 5 levels or less.. While larger buildings have seen a steady uptick in average vacancies over the past six months, according to Moody's Analytics, small and medium-sized office buildings have actually seen a decline in vacancy rates over the same period.
In contrast to areas with fewer tall buildings, eight out of nine metropolitan areas with a moderate density of skyscrapers (between 20 and 50 stories) have struggled with growing vacancy issues. A deeper analysis is still necessary to determine where the best opportunities and underlying value still exist in this ever-changing landscape.
Original Publication Credit: Globe St.
Image Credit: Rethinking The Future
