The U.S. apartment vacancy rate in major cities has hit a staggering 6.1% in Q4 2024, the highest level seen in 13 years. This isn’t just a statistic—it’s a clear signal that the commercial real estate meltdown we’ve been dreading is now a harsh reality. The pandemic has shifted the dynamics of urban living, and we’re witnessing the fallout in real time. With remote work becoming the norm, demand for city apartments has plummeted, leaving landlords scrambling to fill empty units.
On the commercial side, office vacancies have reached unprecedented levels. Many businesses are downsizing or closing their physical offices altogether, unable to justify the cost in the face of a remote workforce. High interest rates and economic uncertainty only add fuel to the fire, making it nearly impossible for property owners to refinance their loans. According to the Conference Board, over $1 trillion in commercial real estate loans will come due in the next two years, posing a significant threat to the banking sector.
Rental prices, once a hot topic of conversation, have remained stagnant year-over-year. The national rent per unit ended 2024 at $1,729, a slight increase from $1,712 at the end of 2023. This flat growth is a far cry from the rapid rent hikes we saw in the pre-pandemic years. The ripple effects of these vacancy rates are profound, affecting everything from urban development to community well-being. Cities are struggling to maintain vibrant neighborhoods as more properties sit empty.
Sources:
https://fred.stlouisfed.org/series/RRVRUSQ156N
https://www.calculatedriskblog.com/2025/01/moodys-apartment-vacancy-rate-increased.html
https://hbr.org/2024/07/u-s-commercial-real-estate-is-headed-toward-a-crisis
https://thehill.com/opinion/finance/4689279-the-commercial-real-estate-crisis-hiding-in-plain-sight/
h/t IAmNotAnEconomist
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