I spotted this pair in Axios: Office space available for lease in the U.S. is at a record high
Remote work is already crushing the office market, and the data is a sign that the distress is going to get worse — vacancies, already at historic highs, will likely go higher.
Details: Looking at office availability is different from looking at office vacancy rates. Availability doesn’t just look at empty offices. It includes occupied office space where the tenant notified the landlord they won’t be renewing.
The percentage of office space available for lease is at 16.4% and increasing… fast.
But… let’s wrap some perspective too. Quote
Market watchers were spooked by Federal Reserve data showing that the holders of commercial real estate loans are a highly concentrated group — with small and regional U.S. banks (those not in the top 25) collectively holding 67%. Under the hood, the situation is more nuanced, as detailed in two reports from the Mortgage Bankers Association and Moody’s Analytics.
The 67% figure includes loans backed by traditional commercial real estate — apartment complexes, office buildings, retail space — but it also includes construction loans, loans backing farmland, or loans to owner-occupied properties like two-family houses.
Why do we care about office space? Two reasons.
First, it will be garbage for companies to push employees back to the office if there aren’t offices to go back to. Look to lease commitments to speak to an organization’s commitment, so I’d ask customers about their leases and track that data.
Second, there are all the related industries around office space to consider the impact to. This is a market that’s changing, and in that change is the opportunity. There are pitfalls here, for sure. One can make lemonade out of lemons if you’re aware.