The office sector in 2025 continues to face a record-high office vacancy rate.
Once-bustling office towers in central business districts from San Francisco to Dallas–Fort Worth now carry vast amounts of empty space, a stark contrast to pre-pandemic levels when demand for office space seemed insatiable.
Today, still, many office buildings sit partially dark, while others are flooded with sublease space or being repositioned entirely.
According to Moody’s Analytics and recent labor statistics, slowing demand from professional and business services and the financial activities sector has eroded absorption.
Even as millions of square feet of new office space have been delivered, occupiers continue shrinking their footprints under hybrid and remote work models.
The result is a widening gap between office inventory and actual office using employment.
Nationally, the office market now counts tens of millions of square feet vacant, with some western markets such as San Diego and San Francisco faring worse than northeastern markets or the Twin Cities.
The National Office Vacancy Rate
Vacancy calculations show the national average vacancy rate edging toward 20%, with some metros well above that level. Meanwhile, owner occupied buildings remain steadier, but investment sales volume for multi-tenant office properties has plunged as property owners confront falling property values.
For tenants, the silver lining is clear: the current supply–demand imbalance has tipped the scales in favor of occupiers. With new construction slowing, acquiring zoning approval becoming tougher, and landlords staring down excess supply, tenants who benchmark office rents against the report period’s depressed comparables can unlock highly favorable deals.
1. The City with the Most Empty Office Buildings is San Francisco
San Francisco remains ground zero for the nation’s office distress. Vacancy rates have reached 28.6%–29.3%, with some submarkets pushing past 30%.
- Where vacancies are concentrated: The Mid-Market and Financial District corridors are hardest hit, with large blocks of Class A space sitting dark.
- Why it’s this bad:
- The city was overly reliant on tech firms, many of which downsized during the 2022–2024 correction.
- Remote work adoption remains especially high in the Bay Area, keeping daily occupancy levels stubbornly low.
- A wave of lease expirations hit in 2024–2025, and many tenants opted to contract rather than renew at the same footprint.
What this means for tenants: San Francisco landlords are under enormous pressure. With trophy towers trading at a fraction of pre-pandemic values, new tenants can secure deep rent discounts, extended concessions, and favorable renewal terms if they benchmark against these distressed market comparables.
2. Austin
Austin’s meteoric rise as a tech hub has backfired into an office glut, with vacancy rates reaching 28.5%.
- Where vacancies are concentrated: Oversupply is most acute in Downtown and The Domain, where developers delivered millions of square feet just as demand softened.
- Why it’s this bad:
- A construction boom outpaced leasing demand.
- Tech sector volatility (including hiring freezes and pullbacks) left Austin with too much space and too few takers.
- Tenant downsizing during renewals has left landlords with large contiguous blocks difficult to fill.
What this means for tenants: In Austin, the story is about timing. New supply is colliding with weakened absorption, forcing landlords to compete for a smaller tenant base. That translates into tenant-friendly economics across both new and second-generation space.
3. Seattle
Seattle’s vacancy rate now sits just above 27.5%, representing one of the steepest increases among major markets.
- Where vacancies are concentrated:
- Downtown Seattle has vacancy levels at or near 30%, compared to suburban nodes (like Bellevue), which have weathered the downturn more resiliently.
- Why it’s this bad:
- Heavy dependence on Big Tech occupiers (Amazon, Microsoft, etc.) made the city especially vulnerable to space givebacks.
- Hybrid work is entrenched, with surveys showing office attendance lagging behind other metros.
- Newer Class A towers are faring better, but older Class B product is struggling to attract tenants.
What this means for tenants: Seattle’s bifurcated market gives tenants options. Downtown landlords are particularly aggressive with concessions, and tenants who benchmark properly can negotiate significant rent reductions or upgrade into higher-quality space for the same price.
4. Denver
Denver’s vacancy has climbed to 25.2%, showing a consistent pattern of oversupply.
- Where vacancies are concentrated: Vacancies are most visible in the Central Business District, with suburban corridors like the Denver Tech Center somewhat healthier but still challenged.
- Why it’s this bad:
- Denver’s market saw a flood of speculative development in the late 2010s and early 2020s.
- Leasing has not kept pace, particularly as regional firms embrace flexible and hybrid office strategies.
- Energy and professional services tenants, once key demand drivers, have downsized footprints.
What this means for tenants: With supply significantly outpacing absorption, Denver tenants should expect ample landlord competition for deals, especially downtown, where effective rents have been sliding.
5. Bay Area (Excluding San Francisco)
The broader Bay Area reports vacancy rates between 25.5%–26.4%, making it one of the weakest regional office markets in the country.
- Where vacancies are concentrated: Silicon Valley and Peninsula submarkets (Santa Clara, Sunnyvale, Palo Alto) are facing elevated levels of sublease space and shadow vacancy.
- Why it’s this bad:
- The tech slowdown cut deep into regional leasing.
- Many large occupiers, from start-ups to established giants, are offloading space onto the sublease market.
- Tenants are gravitating only toward newer, amenity-rich Class A space, leaving older properties behind.
What this means for tenants: Across the Bay Area, sublease availability provides unique leverage. Benchmarking against these discounted sublease comps can drive renewal negotiations lower.
6. Portland
Portland’s vacancy now stands at 21.2%–21.8%, a sharp increase from pre-pandemic levels.
- Where vacancies are concentrated: Vacancies are most visible in downtown Portland, where civic challenges and declining foot traffic have slowed recovery.
- Why it’s this bad:
- Population and business outflows from downtown reduced demand.
- Remote work reduced office occupancy, and some tenants relocated to suburban markets.
- Landlords have been slower to reposition properties, leaving older stock uncompetitive.
What this means for tenants: Portland’s downtown weakness means bargaining power is firmly with occupiers, who can use vacancy data to negotiate below-market renewals or relocate into upgraded space.
7. Downtown Los Angeles
Downtown Los Angeles remains one of the nation’s most distressed office submarkets, with vacancy exceeding 30%.
- Where vacancies are concentrated: The problem is largely a Downtown L.A. phenomenon; Westside and suburban markets like Century City remain stronger.
- Why it’s this bad:
- Flight to quality: Tenants have favored premium Westside assets, leaving downtown towers hollowed out.
- Crime and safety concerns have dampened return-to-office enthusiasm.
- New deliveries have only added to the challenge of filling space.
What this means for tenants: Tenants willing to commit to Downtown L.A. can extract unprecedented concessions—free rent, turnkey improvements, and reduced escalations—by benchmarking against distressed downtown comparables.
Key National Trends for Office Sector
- Tech Hubs Hit Hardest: San Francisco, Austin, Seattle, and the Bay Area lead the vacancy rankings, all exposed to tech layoffs and hybrid work.
- Downtown Struggles vs Suburban Resilience: In most markets, downtown cores are disproportionately vacant, while suburban nodes retain more stable occupancy.
Elevated vacancy rates, unprecedented levels of sublease space, and record amounts of total square feet vacant are reshaping the economics of commercial real estate. In many metropolitan statistical areas, downtown cores continue to resemble ghost towns, while suburban properties show relative resilience.
But the broader truth is undeniable: across regional boundaries defined by market boundaries, office using sectors are leasing less, even as millions of square feet remain in the supply pipeline.
Benchmark Your Leases to the Current Office Market
For tenants, this climate offers leverage.
Benchmarking against full service rates, analyzing vacancy calculations, and comparing to customized data within the regional boundaries of a target market will ensure occupiers do not overpay. In many metros, the gap between office construction begun and actual demand means tenants can negotiate for concessions, rent relief, or even a move into higher-quality office towers for the same cost.
While landlords navigate labor market headwinds and struggle with declining property values, tenants have the ability to capitalize.
The lesson is straightforward: in a market marked by excess supply, weak employment numbers, and space reverting to pre-pandemic levels, the best strategy is to freely grant yourself negotiating power by benchmarking to the national vacancy rate and local submarket realities.
Doing so ensures every renewal or relocation is aligned not with landlord optimism but with the cold math of the office vacancy rate.
And leverage only pays off if you have the data and benchmarking tools to back up your negotiation. That’s where REoptimizer® comes in.
Our platform takes the complexity of the office market—from vacancy calculations and sublease space to market boundaries and office rents—and translates it into clear, actionable strategies for your next lease or renewal.
Whether you’re looking at millions of square feet downtown or evaluating suburban properties, REoptimizer® empowers you to see the real numbers, compare against national averages and regional boundaries, and negotiate from strength.
In a market defined by empty towers, excess supply, and landlords under pressure, tenants who use REoptimizer® don’t just find space, they win deals.
Learn more about REoptimizer® today.
