Office sector vacancy reached a new record at 19.8% in Q3, according to Moody’s. This marks a significant increase from the previous quarter and surpasses two historic peaks of 19.3% in 1986 and 1991. The office sector is currently in a “tug-of-war” as the tight labor market gives workers more leverage amid companies’ return-to-office push. As a result, office vacancies are continuing to creep up.

The U.S. is home to the largest commercial property market in the world, with prices in the sector dropping nearly 11% since March 2022 when the Federal Reserve began hiking interest rates. Many office workers transitioned to remote work during the Covid-19 pandemic, with the number of Americans working from home tripled between 2019 and 2021. However, over the last two years, there has been a heightened push to corral workers back to the office, as employees trickle back into nearly empty buildings. 

A Resume Builder survey of 1,000 employers found that 90% of companies will return to the office by the end of 2024. Some major firms, including BlackRock, Amazon, Apple, and JPMorgan Chase, issued office mandates last year as part of a push to fill offices and boost productivity.

Many companies are hesitant to enforce five-days-a-week in-office policies, opting for three or four required in-office days. With the unemployment rate sitting at just under 4%, workers have unprecedented strength due to the unemployment rate sitting at just under 4%, giving them more muscle when it comes to flexible policies. The office sector is facing a challenging environment, with prices plummeting nearly 11% since March 2022.

Source: Bloomberg
Source: MSN