The U.S. office sector ended 2023 in much the same way it started the year: Vacancy rates were up and asking rents were down.
That’s the somewhat glum news from CommercialEdge’s December 2023 National Office Report.
According to the report, the national average office listing rate came in at $37.73 a square foot in November of last year. That’s a dip of 0.9% when compared to the same month a year earlier.
Not all office asset types performed equally, either. According to CommercialEdge, the listing rate for Class-A and Class-A+ office spaces decreased by 2.4% in November of last year when compared to the same month in 2022. Commercial Edge says that listing rates for these higher-end office properties averaged $45.85 a square foot across the United States.
Class-B office rates actually increased a bit, jumping 0.2% from November of 2022 to $30.37 a square foott in November of last year. Class-C office spaces saw their average listing rates jump 1% to $23.29 a square foot on a year-over-year basis in November.
In the Midwest, office space listed for an average of $28 a square foot in Chicago, down 0.60% from a year earlier. In Detroit, office space listed for an average of $21 a square foot in November, a jump of 1% from a year earlier, while in the Minneapolis-St. Paul market, office space rented for an average of $26 a square foot, up a slight 0.80% from a year earlier.
In Texas, office space rented for an average of $30 a square foot in Houston in November, down 1.10% from a year earlier, and $41 a square foot in Austin, also down 1.10% from a year earlier.
The news regarding vacancies wasn’t great, either. CommercialEdge reported that the national office vacancy rate stood at 18.20% as of the end of November of last year, up 190 basis points from a year earlier.
In Detroit, the office vacancy rate hit 25.70% in November, up 500 basis points from a year earlier, while in the Twin Cities, that rate was 17.80%, up 340 basis points from November of 2022. Chicago’s office vacancy rate stood at 18.30% in November, which was actually down 110 basis points from a year earlier.
In Texas, the Houston office vacancy rate was 25.40% in November, down 90 basis points from a year earlier. In Austin, the rate stood at 21.20%, up 300 basis points from November of 2022.
