Office Rot: America’s Quietest Economic Disaster

Originally Posted On Jon Hall’s Apocalypse Diaries

In March 2025, 19.9% of office space was vacant nationwide, a 170-basis-point increase year-over-year. By early 2025, vacancy rates skyrocketed to almost 20%, with projections suggesting they could reach 24% by 2026. This projection potentially erases $250 billion in commercial property value.

San Francisco exemplifies this urban unraveling. Axios reported in June that the city could convert its empty offices into more than 61,000 housing units. Entire downtown blocks sit underused, a quiet monument to the hybrid‑work era.

Chicago faces the same reality. Downtown vacancy hit a record high of 23% at the start of 2025, with “zombie buildings” hollowing offices out. River North’s Blackstone tower remains 30% empty, draining life from both surrounding businesses and foot traffic.

While remote and hybrid work are easily blamed, multiple forces are converging to create this office rot…

• High interest rates make refinancing empty buildings prohibitively expensive, setting the stage for distressed sales and foreclosures as commercial debt matures through 2026..
• Urban decay results in declining foot traffic and shuttered retail storefronts, as well as safety concerns – which prevents any real downtown recovery.
• AI and automation have fueled layoffs in tech, finance, and customer service – the former industries that once filled these same towers.
• Companies choose modern quality and convenience over outdated 1980s/1990s offices. Even as employers try to lure employees back to offices with gyms and cafes, the aging bulk of urban stock remains empty.

It’s not just about remote work. It’s a multi-system urban failure where financial stress, shifting labor patterns, and changing corporate interests explode. Visible in these hollowed-out cores of America’s once great cities is a collapse happening in slow-motion.