There were $3.6 billion worth of office transactions recorded in the opening two months of 2024, according to Yardi Matrix, with properties selling for an average of $179 per square foot.
That’s down from $4.6 billion during the first two months of last year, with the per-square-foot trading cost of properties seeing a reduction as well. Through February in 2023, office properties sold at an average of $232 per square foot, per Yardi.
The office market continues to reel as it adjusts to a new normal, with companies continuing to balance onsite requirements with an employee base that embraced work-from-home policies during the COVID-19 pandemic. Even with more employers bringing workers back for greater shares of the work week, office use and remote work rates are uneven across metros, suggesting that some areas will simply lag in office sector recovery.
According to security provider Kastle Systems ongoing occupancy return rate study, which tracks onsite work via daily security card swipes in 10 markets, Texas metros like Austin, Dallas and Houston thus far lead in office use, while large coastal hubs still have lower use rates. Consider that in the first week of March, the office use rate in Austin was over 20 percentage points higher than that of San Francisco.
But it’s hard to get a holistic read because tracking remote work is an inexact science, with no data source offering a complete picture. For example, take figures from the Census Bureau’s American Community Survey, which includes data about share of the American worker base that mainly works from home. The survey’s most recent iteration found that the share of workers primarily working from home decreased to 15.2% in 2022, down from 17.9% one year prior, but still almost three times more than the percentage from 2019. Via the survey’s findings, Austin’s work-from-home rate was 28.0%, more than 10 percentage points above the national average and second-highest among metros, trailing just Boulder, Colorado.
Yardi reconciles the seemingly dissonant findings through the substantial expansion of office employment growth in Texas’ capital. Austin has seen office employment vault by 32% since 2020, allowing it to maintain a large share of remote workers and a healthy return-to-office recovery. Simply put, one currently has to take many metrics into account to glean a thorough office utilization landscape.
In the meantime, office vacancies are on the rise, with the national vacancy rate at 17.9%. That’s up 1.4 percentage points year over year. The rate is higher in many coastal, tech-heavy markets, given the swath of layoffs that affected the industry from late 2022 onward. Seattle, which houses tech giants such as Microsoft and Amazon, has been hard hit, with the city’s vacancy rate growing 4.3 percentage points to 22.5% just in the past year.
