Office Market Real Estate Trends

U.S. Office Market Outlook – August 2023

U.S. Office Market Outlook August 2023
Image by Olga Kaya/

Some 108 million square feet of office space was under construction across the nation at the end of July, while office deliveries totaled 27.4 million, the latest Yardi Matrix office report shows.

Report Highlights

  • The average full-service equivalent listing rate was $37.89 per square foot at the end of July, a 0.4 percent increase when compared to July 2022.
  • Office vacancy reached 17.1 percent in July across the top 50 U.S. office markets, up 200 basis points from July 2022.
  • The under-construction pipeline featured 108 million square feet of office space at the end of July.
  • Nationwide office transaction volume totaled $17.5 billion year-to-date in July.
  • Office properties traded at an average of $196 per square foot.

Tech-fueled markets see office vacancy rise

Nationwide office vacancy was 17.1 percent in July, up 200 basis points when compared to July 2022. While vacancies have increased across the nation since the start of the pandemic, the highest rates were present in tech-centric markets such as Seattle (20.9 percent vacancy, a 560 basis-point increase year-over-year), Austin (20.5 percent, 490 basis points), San Francisco (21.7 percent, 370 basis points), San Diego (16 percent, 350 basis points) and Twin Cities (17.4 percent, 330 basis points).

At the same time, national average full-service equivalent listing rates clocked in at $37.89 per square foot at the end of July, increasing by 40 basis points from July 2022 and seven cents more than June 2023 rates. The largest gains in asking rates year-over-year were present in Boston (14.3 percent year-over-year), San Diego (9.9 percent), Twin Cities (5.6 percent), Orlando, Fla., (5.5 percent) and Atlanta (4.5 percent).

Key office markets drive $17.5 billion in transactions

Office transaction volume totaled $17.5 billion at the end of July, and the average price per square foot stood at $196. Office investment was concentrated in gateway markets such as Manhattan ($1.5 billion), Boston ($1.1 billion) and Los Angeles ($1.2 billion), as well as the nearby New Jersey ($931 million) and Washington, D.C., ($889 million). While Manhattan leads U.S. sales in 2023, average prices dropped significantly from $1,172 per square foot in 2021 to $582 per square foot in 2023.

Nationwide, the under-construction pipeline continued to shrink, featuring 108 million square feet of office space under construction at the end of July, or 1.6 percent of total stock. An additional 27.4 million square feet was delivered in the first seven months of the year, Yardi Matrix data shows. The largest pipeline on a percentage of stock basis was found in Austin (6.2 million square feet underway, 6.9 percent of stock), Nashville (3.3 million, 5.8 percent), Boston (13.9 million, 5.7 percent), San Diego (5.2 million, 5.6 percent) and Seattle (6.6 million, 4.8 percent).

Read the full Matrix Office National Report-August 2023.

About the author

Corina Stef

Corina Stef started her tenure as a music journalist a decade ago and has been occupying a full-time real estate editor and blogger position since 2017. She is a senior associate editor with Commercial Property Executive and Multi-Housing News who focuses on commercial real estate trends and in-depth stories.

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