Four years post-Covid, most employers and employees are now living the new normal—they are remote, hybrid or distributed, working where they thrive and often coming into the office three or four days a week. Right now, many companies have no formal policy as to days in the office, and most companies are not back in the office five days per week, nor do we expect them to ever be again.

The effect of this on office space demand has been severe, as most people intuitively realize at this point. But how bad is it?

From my perspective, the answer is that it’s more complex than most people think, and there has been little public discussion about it in the commercial real estate industry. This is a critical knowledge gap that business leaders and executives may not be aware of, and CEOs must understand the current climate so as not to overpay for that next lease.

McKinsey & Co. found that across U.S. cities, vacancy rates grew by 13% from 2019 to 2022. Office availability rates that include all space on the market for lease or sublease, and not just what is vacant, have increased nationally from 17% pre-Covid to 26% today, according to data we extracted from CoStar. While these fluctuations don’t sound that bad, imagine a residential real estate comparison where you drive home and one out of four houses have “for sale” signs in front of them. That starts to paint the picture.

Leases that were signed pre-Covid are expiring and will likely be for years to come. In my experience, most commercial leases are usually at least five years in length, and pre-Covid, many large companies in bigger metro areas commonly signed leases as long as 10 years. Based on that, and backed by our proprietary database of tens of thousands of major office leases across the U.S., half of all office leases have yet to expire since the pandemic began. Therefore, the downsizing of the corporate tenant population has a long fuse yet to burn.

Realistically, when the balance of U.S. office leases expires, I think we can expect additional availability to come to market, taking national office space availability rates up to levels never seen before. If availability were to go up, there would be roughly billions of square feet of office space on the market for lease, and that visual of homes for sale in your neighborhood would go up to one out of three.

But why is no one in the commercial real estate industry talking about this or writing about it?

Unlike the stock market, there’s no one to trade on negative market information like there are short sellers of other financial instruments and asset classes. No one in our industry gains from talking about the market getting soft other than commercial real estate tenants. But given how the commercial real estate brokerage model operates, I imagine no one is thinking about the business owners and executive teams that make up the commercial real estate tenant audience.

Many commercial real estate tenants are perplexed today because they have not generally seen landlords reduce commercial real estate asking rents. Based on data extracted from CoStar and our own monthly tracking of office asking rents across all major U.S. office markets, office subleases around the country are typically priced lower than what landlords are asking while traditional leases on average haven’t experienced adjustments in rents.

CEOs and business owners going to market looking to relocate, renew or bring their teams back to the office are vulnerable to the lack of transparency in the commercial real estate industry, given this massive distortion in the perception of the market.

To navigate this inefficiency, corporate tenants must do their due diligence regarding the office market.

For tenants considering renewal, they first should get out into the market at least a year before their lease expiration to uncover what is happening in their chosen submarket areas, as the local press may not uncover its current state. Do the necessary due diligence by researching your market to ensure your strategy for relocation or renewal plans is successful. Corporate tenants can also consider a partner that represents tenants as a business model versus the traditional full-service or dual agent firms that are price-supporting the landlord.

For companies that want to have office space of any size, the future is bright as commercial real estate tenants could get strong values for years to come.