Office Space Blues: Major Vacancies Hit San Antonio and Beyond
San Antonio, like many other cities across the United States, is feeling the effects of a changing workplace. Here in the Alamo City, it seems that office vacancy rates are climbing faster than ever, and that number is starting to paint a rather concerning picture for the local commercial real estate (CRE) market.
The Big Picture
As you may have heard, office vacancy rates are currently at their highest point in 45 years. Quite the alarming statistic, right? Experts have even predicted that by early 2026, a staggering one-quarter of all office space in the country could be sitting empty. And it’s not just San Antonio feeling the heat — at least 11 major metros have $1 billion or more in empty office space. Talk about a serious trend!
San Antonio’s Situation
When it comes to the Lone Star State, San Antonio is faring a tad better than its big siblings. Sure, we do have about 8.46 million square feet of vacant office space as of mid-year, translating to a lost rent value of around $199.36 million. But when you stack that up against cities like Dallas or Houston, you start to see a different picture unfold.
In fact, Dallas is facing the harshest reality of all, with over 52.8 million square feet of vacant office space, leading to an expected loss of over $1.6 billion in rent revenue. That’s a lot of empty offices! Houston isn’t far behind either, with almost 50 million square feet left unoccupied, amounting to about $1.55 billion in lost rent. Austin, just a skip away, has more than twice the vacant space compared to us, knocking at the door of $835 million in expected losses.
A Cultural Shift
It’s worth noting that while many Fortune 500 companies have called their employees back to work in person, there are still around 28.6 million workers — that’s about 20% — who are either working hybrid or remote schedules. This is particularly evident in New York City, where a monumental 105.8 million square feet of office space is currently unoccupied. That results in an estimated rent loss of around $7.61 billion per year! Yikes!
But it’s not just New York. Many experts believe this vacancy spike is part of a broader cultural shift. Well, it certainly feels that way, doesn’t it? When comparing today’s trends to the vacancy peaks of the 1970s and 1980s, it seems that building way more office space than needed has played a part in this mess.
What’s Next for Big Cities?
Stijn Van Nieuwerburgh, a professor at Columbia Business School, even coined the term “urban doom loop” to describe cities that face continuous decline without strategic changes. He suggested that New York could potentially convert up to 40% of its office space into residential units to revive its economy, but that kind of transformation comes with its own set of challenges.
California isn’t escaping this trend, either. Los Angeles, San Francisco, and San Jose are among the top cities experiencing major rent revenue loss, all due to their own significant amounts of vacant office space. Meanwhile, back in Texas, even though cities like Dallas and Houston face these high rates of vacancy, developers are doubling down, pouring cash into what they call “trophy buildings.” They’re placing bets that shiny new buildings in vibrant areas will draw workers back into the offices, even if that means that older buildings sit and collect dust.
Final Thoughts
In the end, it seems the old adage “location, location, location” holds true more than ever. As we navigate these new waters, the neighborhoods that provide lively atmospheres and great amenities are likely to remain in the game. So, if you’re wondering what’s next for San Antonio and its neighboring cities, keep your eyes peeled. Changes are afoot, and with them, perhaps there’s a silver lining for our office spaces.
