CompStak’s 2024 Year-End Office Market Report: Part One

SKIP AHEAD TO

• Key Findings
• U.S. Financial Services Employment Rose in 2024 but TAMI and Professional and Business Services Contracted
• Average Monthly Days Worked from Home Declined in 2024 for Fourth Consecutive Year, but Pace of Decline Slowed
• National CBD Office Vacancy Exceeded Suburban Average Again in 2024 But Trended Downward At Year’s End
• The Gateway Starting Rent Index Shows Signs of Stabilization as the Market Approached the Five-Year Anniversary of COVID’s Onset

The office market continues to evolve, shaped by shifting work habits, leasing activity, and economic forces. While office job losses slowed, remote work trends may be stabilizing, and TAMI tenants are showing signs of renewed leasing momentum. Prime Class A rents are nearing a potential peak, and landlords are adapting with record-high tenant incentives to secure long-term commitments. Meanwhile, NYC remained a hotspot for high-value legal leases.

In this blog series, we’ll break down the major insights from CompStak’s 2024 Year-End Report, diving into what these trends mean for the office market in the years ahead.

Want the full insights? Download a copy of the report here.

KEY FINDINGS

Office Job Declines Slowed in 2024

Office-using employment dipped slightly (-0.1%) in 2024, with financial services growing while TAMI and professional services shrank for a second year.

WFH Trends May Be Stabilizing

Remote work declined for the fourth year, but the slowdown in decline suggests hybrid work may be reaching an equilibrium.

Prime Class A Rents Approach a Possible Peak

Prime Class A office rents continued their strong growth trajectory in 2024, potentially reaching a cyclical peak as demand outpaces supply. Meanwhile, Class B+ space saw rising rents, indicating a possible spillover effect in demand.

TAMI Poised to Return to the Market

TAMI’s share of leasing reached its highest level since 2021. With a growing share of upcoming expirations, this could signal increased activity in 2025-2027.

Renewal lease Length grew in 2024, signaling a positive office market

Even as renewals’ concessions remained elevated, free rent hit record highs, narrowing the gap with new deals—suggesting that landlords are prioritizing retention but still conceding on terms.

NYC Led High-Value Legal Deals in 2024

NYC dominated for top value deals in the legal sector with Ropes & Gray, Willkie Farr & Gallagher, and Winston & Strawn securing major deals in Midtown. Legal firms were a key driver of office demand in 2023 and 2024.

Work Value Reached a New Peak in 2024

Tenant improvement (TI) packages hit a cyclical high, with renewals seeing the biggest increases. Landlords are offering higher work value per square foot to secure longer lease commitments, a trend that has strengthened post-COVID.

Total Office-Using Employment Dipped Slightly in 2024, Declining Less Than in 2023

Nationwide office-using employment experienced a slight decline in 2024, the second consecutive annual decline, slipping 0.1%, but less than the 0.6% decrease in 2023. As of year-end 2024, national office-using employment was still 14.1% higher than the most recent trough reached in April 2020, and 0.9% lower than the most recent peak seen in April 2023.

U.S. Financial Services Employment Rose in 2024 but TAMI and Professional and Business Services Contracted

Overall office employment in 2024 was buoyed by the financial services sector, which saw an annual increase of 0.6% in January 2025, the fourth consecutive year of expansion. Meanwhile, TAMI and professional services sectors declined for the second year in a row, decreasing by 0.2% and 0.3%, respectively.

Average Monthly Days Worked from Home Declined in 2024 for Fourth Consecutive Year, but Pace of Decline Slowed

In the 2024 year-end data from Insights from WFH Research and the Survey of Working Arrangements and Attitudes, the overall average of days worked from home in 2024 was 27.6%, a decline of 120 basis points compared to 2023. However, the pace of declining days worked from home may be plateauing, with 2024’s year-over-year drop marking the smallest decline since this data began being tracked in March 2020. Meanwhile, in January 2025 the days worked from home ticked up to the highest January level since January 2022, and up 250 basis points from December.

National CBD Office Vacancy Exceeded Suburban Average Again in 2024 But Trended Downward At Year’s End

National office vacancy has been steadily on the rise since 2019 with Central Business District (CBD) office vacancy rates consistently exceeding the suburban average since 2021, according to the NCREIF NPI. CBD office vacancy rates peaked during the second quarter of 2024 at 20.6% and ended the year slightly lower at 20.3%. The suburban office vacancy average rose throughout 2024, and by Q4 2024, it hit another all-time high of 18.2%. While comparatively higher, CBD office vacancy rates trended down for the first time since 4Q 2019 in 4Q 2024.

The Gateway Starting Rent Index Shows Signs of Stabilization as the Market Approached the Five-Year Anniversary of COVID’s Onset

As of Q4 2024, the Gateway Market Starting Rent Index is up 6.8% from the trough reached in the most recent cycle in Q1 2021, but down slightly by 1.7% from the most recent peak in Q3 2022. However, the starting rent index is showing signs of stabilizing, having hovered within just 188 basis point range for the last seven quarters. By contrast, the starting rent index fell 682 basis points from the end of 2019 to the COVID trough in Q1 2021.