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How Apartment Rental Prices Compare to Office Vacancy Rates

It’s been more than three years since offices emptied out for what many thought would only be a temporary period. Little did we know three years later many would still sit empty. While that has been true in general, the pace at which workers have returned and where they have returned to the office has differed greatly. A lot of trends emerged as a result of the pandemic: more remote work, the new concept of “hybrid” work schedules, and for a lot of city dwellers in particular, relocating to places with a lower cost of living. Housing costs around the country have certainly been a factor in discussions around returning to the office. Inflation has been on the rise in the U.S. since 2021, the year residential asking rents hit a record high. Added to the ongoing affordable housing crisis, the cost of living has risen almost everywhere, so it’s easy to see why office employees are seeking to work remotely in places where they aren’t crushed by steep housing costs. 

CityMedian one-bedroom apartmentOffice vacancy rate
New York, NY$3,78022.4%
San Francisco, CA$3,00024.8%
Miami, FL$2,90015.8%
Boston, MA$2,70013.1%
San Jose, CA$2,63014.2%
Los Angeles, CA$2,42025.5%
San Diego, CA$2,40014.8%
Washington, DC$2,37019.7%
Fort Lauderdale, FL$2,10017.6%
Seattle, WA$1,98021.1%
Data: Zumper, Cushman & Wakefield

Now, at a time when the worst of the pandemic is in the rearview mirror and companies are calling workers back to the office more frequently, are steep rental prices leading to higher vacancy rates in major cities around the country? Based on median rental prices for one-bedroom apartments from Zumper and first quarter 2023 office vacancy data from Cushman & Wakefield, the answer is a bit of a mixed bag.

In New York City and San Francisco, the top two most expensive cities in terms of median rental prices at $3,780 and $3,000, respectively, office vacancy rates are also some of the highest among cities measured. New York office vacancy clocked in at 22.4 percent while San Francisco measured 24.8 percent, respectively. Both cities have struggled with higher office vacancy since the pandemic began. Many companies in San Francisco’s tech industry have downsized or relocated their offices altogether over the past three years, and the city has lost residents to places with more affordable housing costs. New York City’s office occupancy rates are still averaging just under 50 percent, according to Kastle Systems data, and major occupiers including JPMorgan Chase are rethinking their footprints and downsizing. Major cities with lower median rents like Fort Lauderdale ($2,100) and Seattle ($1,980), had lower office vacancy rates, but not by much, at 17.6 percent and 21.1 percent, respectively. 

But in other cities, the metrics didn’t necessarily correlate. For instance, in Boston, where the median rent for a one-bedroom apartment is $2,700 a month, the city’s vacancy rate is 13.1 percent, among the lowest of the major cities tracked. It’s a similar story in San Jose, California, where the median rental price is $2,630 and the office vacancy rate is 14.2 percent. In Los Angeles, which has one of the highest vacancy rates in the country with 25.5 percent, the median rent price for a one-bedroom apartment is $2,420. 

As with most things in life, there’s more to the story than the numbers show. The nuances that aren’t reflected in the figures could very well be connected to the major industries that represent the lion’s share of a city’s office market and current supply and demand numbers. In Boston, the country’s life sciences capital, the demand for more space for biotech companies has been high for years but has recently slowed down amid high interest rates and worsening economic conditions. While office vacancy is lower than other major markets, data from other brokerage firms show the city’s vacancy is closer to 17 percent and sublease availability is at a two-decade high. In Miami, rental prices have been rapidly rising over the past two years as the office market has been on a hot streak. Major companies like Oracle have relocated to Miami while others including Microsoft and Blackstone have opened offices there. It’s clear that in some cities, like New York and San Francisco, the high cost of rent is having a negative impact on office vacancy rates. But in other cities, there are different forces at play, including the health of major industries, and supply and demand factors.

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