School, college and other closings for Monday

MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all. 

Turn Up Your Support

Across the United States, empty office buildings are leaving once-bustling downtown areas with less foot traffic and are forcing experts, residents and officials to figure out what exactly will happen with these vacant structures.

recent study from the real estate firm Cushman & Wakefield

 found that about one-fifth of U.S. office space was vacant as of the end of last year. The vacancy rate varies, with cities like Los Angeles, Houston and Cincinnati hovering around 25% and cities like Savannah, Ga., and Naples, Fla., coming in under 5%.

The high rate of vacancy is about more than just the 

shift to a work-from-home culture because of the COVID-19 pandemic

, according to David Smith, the head of Americas Insights at Cushman & Wakefield, who authored the study.

“It's really four factors over the last few years that have impacted office occupancy,” he told NPR. “One is we've had a lot of economic uncertainty going back to 2020 and early 2021 and then, again, certainly over the last year as interest rates have risen.”

Smith also factors in remote and hybrid work, the surplus of new constructions that are more appealing to office seekers and a pivot to subleased space to help offset the costs of owning office real estate.

Despite these challenges, Smith is optimistic that vacancy is reaching a peak and that a return to office spaces is imminent for two main reasons.

“One is we expect to see job growth accelerate when we head into 2025 and beyond and that office-using industries in particular will take up a disproportionate share of new jobs that are created,” he said.

“And two, we’re tracking several hundred different companies and their policies around in-office work. And all of them, if they’ve changed their policies over the last couple of years, are actually moving towards having people in more.”

The debate around return-to-office policies has been playing out for well over a year now, as bosses and workers navigate what a post-pandemic world should look like.

Across the private sector, in-office requirements were becoming stricter, 

, echoing what Smith’s policy tracking has found.

“What we’ve found is, people have enjoyed coming back to the office,” Zoom's chief people officer, Matthew Saxon, said last year. “There is a buzz. There's something about being able to go have lunch with your teammates.”

Zoom is just one company on a growing list that is veering away from remote work by bumping up weekly mandatory days in the office for employees. Some other companies have started requiring employees to move near office hubs and have begun eliminating fully remote positions.

This is despite some workers reporting higher levels of job satisfaction, work-life balance and productivity when given the choice between working remotely or in the office, and some researchers saying that an 

in-office presence has not helped big companies make more money

A possible pivot away from office space altogether

office-building landlords face a vacancy crisis

, some people have begun exploring whether there could be a mutually beneficial resolution for the two groups — converting empty buildings into residential housing.

relaxed rules for some office-to-residential conversions

proposed bigger tax breaks for office conversions

expensive, complicated and time-consuming

, with the process often also steeped in bureaucracy. It’s also harder to do for buildings constructed after 1950, according to Robert Fuller of the architecture firm Gensler.

“A lot of the kind of older prewar office buildings have already been converted and tend to work fairly well,” Fuller told NPR last year. “What we’re seeing now is a flood of buildings built in the ‘50s, ‘60s, ‘70s, ‘80s that were much deeper. The advent of air conditioning and fluorescent lighting allowed these much larger floor-plate buildings, and those tend to be a little bit more challenging.”

That's because the center is often darker and doesn’t get sunlight, which makes conversion into homes harder.

As for Cushman & Wakefield’s Smith, he says the office will continue to be part of the U.S. landscape for decades to come.

“I think the long-term trajectory is that the office is a central part of the economy,” he said.

“I think this is an opportunity for the office market as well to redevelop itself. And actually, in 10 or 15 years, we’ll look back and the office market will have revolutionized itself in a really exciting way.” 

Business and Economic News

Homepage

Minnesota News

Minnesota Housing News

Manuela López Restrepo

Author

A recent study calculated that about one-fifth of U.S. office space was vacant at the end of last year. What is the fate of all this empty real estate?

Could vacant office spaces across the U.S. be the solution to a national problem?

Go Deeper.

Like this?

News you can use in your inbox