The years of the COVID-19 pandemic have permanently altered the future of work—and of commercial office space. That's just fine with most employees who can work remotely, according to polling done in recent months. People whose jobs can be done remotely make up 56% of all full-time workers, according to Gallup, and 60% of them want a permanent work arrangement that is at least hybrid.
That means employers have big decisions anytime a contract on office space comes up for renewal. Higher interest rates, a slowing economy, and shifting work habits have all sent the office real estate market into tumult. And layoffs rippling through the tech sector this year could spell even more vacant office space in cities like San Francisco and New York City, which have traditionally served as tech hubs.
Swyft Filings examined data from commercial real estate firm Lee & Associates' 2022 North American Market Report to see which real estate markets are the most competitive for securing an office lease. Markets, which can include the main city as well as surrounding towns, were ranked by the percentage of vacant office space available. To be considered competitive, markets had to have a vacancy rate below the national average, which was 12.5% in the U.S. Cities and data for Canada were excluded from this analysis.
Many businesses are still maintaining onsite operations, but American offices are hovering around 44% of prepandemic occupancy in 2022, according to commercial office security firm Kastle Systems. The firm tracks how much use physical offices get across 2,600 buildings and 41,000 companies in 47 states. The popularity of remote work—and decreased interest in returning fully onsite— is just one factor associated with the demand for leasing office space.
In fall 2022, the major metropolitan areas of Dallas-Fort Worth, Houston, and Austin led occupancy rates in the country with offices that were nearly half-full some weeks, according to Kastle Systems. But that's still far below how full office spaces were before the pandemic. And Texas metros still have far more vacancies than the most competitive office leasing markets. That's because competitiveness has more to do with how much overall office space has been leased—regardless of the use that space gets by the company.
Competitive markets in this list tend to be in smaller cities where people have been moving to since 2020, coming in well above the U.S. national average of $2.92 per square foot rent and $339 per square foot sale price. Metros including Savannah, Georgia; San Luis Obispo, California; and Spartanburg, South Carolina, are currently seeing some of the most competitive office space markets in the country.
