Office Vacancy Rates Are Up—But That’s Only Half the Story

If you’ve read the headlines lately, you’d think every office building in America is sitting empty, collecting dust and bad debt. There is no denying that vacancy rates are high across the U.S.. National office vacancy hit 20.7% in Q2 2025, the highest since the early 1990s, per Moody’s Analytics .

But numbers without context are just noise. Behind the sensational headlines is great data on how and why some offices are in demand while others collect dust. The story isn’t just about high vacancies. It’s about a changing market that’s dividing offices into winners and losers.

Let’s unpack what’s really going on.

The Tale of Two Offices: Core vs Commodity

That strikingly high vacancy number? It doesn’t apply evenly across the country. Newer buildings in prime locations with great amenities are still leasing. In fact, in places like Miami, Nashville, and Dallas, premium office space is outperforming the market. According to Commercial Edge’s 2025 Office Sector Report, properties built after 2015 with strong ESG ratings, on-site retail, and flexible floor plans have an average vacancy rate of just 12.4%. Meanwhile, those without prime features in less desirable locations are flirting with 30%+ vacancy.

Surprise! Some Tenants Are Expanding

Not every tenant is downsizing. Certain sectors are growing into space.

• AI and biotech firms are scaling fast and leasing in bulk.

• Legal and financial services are upgrading to better spaces to impress clients and attract top-tier talent.

• Even some government agencies are leasing more space to accommodate post-COVID decentralization.

According to REjournals’ mid-2025 data, net absorption in select suburban markets outside Chicago, Atlanta, and Charlotte is positive. This is largely driven by mid-sized companies upgrading from commodity offices to curated, high-performing space.

The Real Threat? Obsolescence, Not Oversupply

Buildings aren’t sitting vacant because people hate offices. They’re sitting vacant because they can’t compete. Many older properties haven’t been meaningfully renovated since before TikTok existed. Poor lighting, bad HVAC, zero flexibility. And in 2025, with ESG regulations tightening and workforce expectations rising, that’s a non-starter. The Urban Land Institute (ULI) recently reported that more than 45% of U.S. office buildings over 20 years old will require major upgrades to remain viable in the next 3–5 years.

What About Rents? Holding Steady for the Right Product

While many assume that rents are tanking alongside demand, that’s not the whole story either. In gateway cities, asking rents for premium space has retained value or even increased slightly as Lessors hold the line on newer inventory and offer concessions instead of discounts.

What Should You Be Doing Right Now? Eve’s Hot Take

This moment requires swift action. If you’re holding onto older product, you’ve got some options:

• Reposition the asset. Invest in amenities, ESG upgrades, and better design to compete in the post 2020 office market.

• Redevelop or convert. If it can’t compete as an office, pivot to mixed-use, medical, residential, storage, or whatever is working in your location.

• Offload it. The outlook for selling non-performing assets isn’t great, but there is hope. Developers and Owner-Users have been competing for the deals that might get overlooked by traditional office Buyers. Just don’t be the holdout that follows the market down.

EVE agents have the data and strategies to help you explore practical options. Whether you’re leasing, repositioning, or planning a long-term hold, let’s connect so we can help support your goals no matter the market forces.