With persistent headlines about “record-high vacancy,” in the office market, one might assume every building is struggling equally. That’s not the case. The reality is more nuanced and for corporate occupiers, more useful.
Most of the empty office space in U.S. markets today is concentrated in a relatively small number of buildings. That’s always been the case to some extent, but here’s what’s new: the share of buildings falling into the “high vacancy” category has surged over the past five years, and the problem is getting worse.
At the end of 2019, fewer than 9,000 U.S. office buildings had vacancy of 25% or higher. That was just 13% of all buildings. As of mid-2025, the number has jumped to more than 14,000 buildings, or 21% of the market.
That shift matters because when vacancy tips past 25%, buildings often struggle to stay competitive — and that creates opportunity for tenants who know how to benchmark and negotiate.
What Does “High Vacancy” Really Mean?
Let’s unpack the definition. High vacancy is generally considered 25% or more of the building sitting empty. Why that number? Because at that level, many owners begin struggling to cover the basics:
- Operating expenses (cleaning, security, utilities)
- Property taxes
- Debt service
Above 25% vacancy, a building may still look full when you walk the halls, but financially it’s under pressure. And pressure on the landlord almost always translates into leverage for tenants.
To keep the data consistent, analysts typically exclude:
- Medical office properties
- Owner-occupied buildings
- Small buildings under 25,000 SF
- New projects still in lease-up
What’s left is a clean picture of true, competitive supply — and the results paint a stark picture.
- 2019: 64% of all vacant office space sat in high-vacancy buildings.
- 2025: That share is now 78%.
In other words, vacancy is no longer spread evenly across the market. Instead, the “problem buildings” are soaking up more and more of the empty space and that dynamic is rewriting how companies like yours should negotiate.
Where Is Office Vacancy Concentrated?
This isn’t just a story about “the office market” in general. It’s deeply local.
San Francisco: The Epicenter
Few markets illustrate the shift more dramatically than San Francisco.
- In 2019, just 10% of buildings crossed the high-vacancy line.
- Today, over 41% of buildings are there.
- Nearly 90% of all vacant space is locked inside those high-vacancy properties.
That’s an astonishing shift in only five years and it’s why San Francisco’s office landscape looks and feels completely different.
San Francisco is caught in what economists call an “urban doom loop.” As office tenants pulled back, downtown foot traffic plummeted. Fewer people in the core meant fewer dollars spent in restaurants, coffee shops, and retail. That decline rippled outward — storefront closures, job losses, and shrinking city revenues.
Layer on top of that rising concerns about crime, homelessness, and street conditions, and you have a downtown struggling to attract both tenants and workers. For companies weighing where to locate their teams, perception matters just as much as the rent roll. In San Francisco, the perception of instability has made it harder for landlords to fill space, even with aggressive concessions.
The result: a feedback loop that accelerates vacancy
As more buildings cross into high-vacancy territory, city services get stretched thinner, neighborhood vitality declines further, and the cycle repeats.
For occupiers, this doesn’t mean San Francisco is off the table, but it does mean the market dynamic is unlike anywhere else in the country. Tenants willing to commit space have unprecedented leverage in negotiations.
Seattle: Close Behind
Seattle has followed a similar pattern, with the share of high-vacancy buildings tripling and nearly 90% of vacant space concentrated in struggling assets.
Los Angeles, Boston, San Jose: The Doublers
In these markets, the share of high-vacancy buildings has roughly doubled in five years. For corporate tenants, that means a lot more options — and landlords willing to work harder to secure renewals and new deals.
Houston & San Jose: Smaller Jumps
Not every market has seen such steep changes. Houston and San Jose each saw vacancy concentration rise by about 10 percentage points — still significant, but less dramatic than the coastal tech hubs.
New York City: Relatively Resilient
In 2019, New York was the only major market where high-vacancy buildings contained less than 50% of total empty space. Today, that share has climbed above 60%. It’s still better balanced than most cities, but the trend is moving in the same direction.
The Flight to Quality Is Real — And Accelerating
So why is vacancy concentrating in certain buildings while others remain relatively full? The short answer: corporate tenants are making sharper, more selective choices.
Executives are prioritizing:
- Location: Transit hubs, walkable neighborhoods, and mixed-use environments win.
- Amenities: Fitness centers, wellness rooms, outdoor space, and food options matter more than ever.
- Flexibility: Open layouts, collaboration zones, and hybrid-friendly designs are non-negotiables.
- Sustainability: ESG goals are influencing lease decisions, with tenants actively seeking out LEED, WELL, and other certifications.
When talent attraction and retention are on the line, companies simply aren’t settling for outdated or uninspiring space. The result? A widening gap. The “haves” are commanding steady rents and stable occupancy. The “have-nots” are sliding deeper into distress.
Why This Matters for Occupiers
If you’re managing a national portfolio, here’s the takeaway: the market isn’t one-size-fits-all anymore.
- Some landlords have leverage: In Class A, high-demand properties, expect rents to hold and concessions to be limited.
- Others are under pressure: In high-vacancy assets, landlords are motivated — and willing to negotiate aggressively.
The implication is simple: benchmarking is everything. Without a clear sense of how your portfolio compares to market conditions — building by building, city by city — you’re leaving value on the table.
The Leverage Is Yours — If You Use It
Vacancy data isn’t just an academic exercise. It’s the foundation of real negotiating power. The fact that more buildings are crossing into high-vacancy territory — and that those buildings now hold nearly 80% of all empty office space — means leverage has shifted to tenants.
But leverage only works if you:
- Benchmark your portfolio to the market.
- Identify where you hold the upper hand.
- Reoptimize your leases to lock in savings, flexibility, or better-quality space.
Why Data Matters Now
The office market is in flux, and not every building is feeling it equally. For C-suite leaders and real estate decision-makers, the key is recognizing where your company has leverage — and where it doesn’t.
Vacancy concentration tells you that story. If you’re in a building that’s underwater, you have more power than you think. If you’re chasing space in a best-in-class tower, knowing how your deal stacks up ensure you don’t overpay.
Either way, the path forward is clear: benchmark, negotiate, optimize.
And that’s exactly where data becomes your edge. The market isn’t just about vacancy rates and percentages; it’s about how those numbers translate into leverage for your portfolio. The companies that win in this environment aren’t the ones with the biggest footprints, they’re the ones who know how to measure, benchmark, and act before their competitors do.
That’s where iOptimize Realty’s REoptimizer® platform comes in. By turning raw market data into clear, actionable benchmarks, REoptimizer® shows you exactly where you hold negotiating power — and how to use it to secure better terms, reduce costs, and elevate your workplace strategy.
Learn more about REoptimizer® gives your portfolio an edge today.
