Office buildings across the country are emptier than ever. Vacancies hit a record high in the fourth quarter of 2023, according to Moody’s Analytics, surpassing peaks from 1986 and 1991.
This shift comes as companies adapt to the rise of remote and hybrid work.
From Office Park to Ghost Town
Remote and hybrid work are down from their pandemic-era peak. Even so, work culture has changed in America, and that change is stickier. So much so, that it has had a lasting impact on companies’ need for physical locations. In response, some businesses are minimizing their physical presence — or transforming it.
Instead of sprawling business districts and office parks, some companies today favor mixed-use arrangements featuring office buildings, retail areas, entertainment, and other amenities in one shared space.
This shift is similar to the retail industry’s reckoning with the rise of e-commerce. Rather than closing brick-and-mortar locations, brands simply reimagined the in-person shopping experience.
The shift hasn’t been smooth sailing for everyone. Office landlords in particular have predictably taken a hit.
But it could be worse. Historically, sharp increases in vacancies were accompanied by economic downturns, which wasn’t the case here. Instead, the office building exodus was more gradual, and to some extent predicted, while the economy as a whole is chugging along.
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