Commercial Property Vacancy Rate by Property Type

Vacancy rate reports get published constantly, but most of them are written for institutional investors, not for the owner of a small strip center or a single warehouse trying to figure out what a national number actually means for their property. The commercial property vacancy rate by property type varies enormously, and a headline figure for “office” or “retail” can hide huge differences depending on location, building quality, and even how the number was measured.

When evaluating a property, I would first look at whether a vacancy figure represents the whole market or a specific segment of it, because that distinction changes what the number is actually telling you.

What Vacancy Rate Means and How It Is Calculated

Vacancy rate is the percentage of a property’s or market’s total leasable space that is currently unoccupied. The basic formula is:

Vacancy Rate = Vacant Square Footage ÷ Total Leasable Square Footage

A related but different figure is the availability rate, which includes space that is vacant plus space that is occupied but actively being marketed for lease, such as a tenant planning to move out soon. Retail figures in particular are often reported as availability rather than pure vacancy, which is worth noting when comparing numbers across property types.

Physical Vacancy vs Economic Vacancy

Physical vacancy simply measures empty space. Economic vacancy measures lost income, including space that is occupied but not paying full rent, perhaps due to a concession, a rent free period, or a tenant in default. A property can have low physical vacancy and still be underperforming financially if a meaningful share of its income is discounted or uncollected.

Why Vacancy Differs by Property Type

Each property type responds to different demand drivers, which is exactly why a single national vacancy figure is not very useful on its own.

Office vacancy has been shaped heavily by hybrid work patterns since 2020, and remains the highest among major property types. National office vacancy fell 30 basis points to 18.3 percent in the second quarter of 2026, the largest quarterly decline since 2015, according to CBRE’s quarterly office market research, with leasing activity up sharply year over year. Notably, prime, high quality office space is recovering faster than older buildings.

Industrial vacancy has stayed comparatively low, supported by e-commerce and logistics demand. Industrial vacancy fell to 6.5 percent in CBRE’s Q2 2026 industrial and logistics figures, aided by big box demand and slower new construction.

Retail availability has held near multi year lows. CBRE’s midyear 2026 outlook noted that the overall retail availability rate was expected to keep declining from 4.9 percent in the second quarter, with new construction remaining limited.

Multifamily, while technically residential rather than commercial in the traditional sense, is often tracked alongside commercial property types by institutional investors. CBRE’s 2026 forecast called for multifamily vacancy to hold steady at 4.9 percent for the year.

Current Vacancy Rates by Property Type (2026)

A few important notes on this table. These are national averages, and individual metro markets can differ substantially. Office vacancy in particular varies widely between downtown and suburban submarkets and between prime and older buildings, so a specific property’s local submarket vacancy is a far more useful benchmark than the national figure.

Retail is reported here as an availability rate rather than pure vacancy, which tends to run slightly higher than a strict vacancy measurement would. Also read Commercial Real Estate Due Diligence Checklist for 2026.

Why Location and Building Quality Matter More Than the National Number

A small owner should treat national vacancy figures as context, not as a direct stand in for their own property. A well located, well maintained building in a supply constrained submarket can outperform its property type’s national average considerably. Conversely, an older building in a market absorbing significant new supply can underperform even a discouraging national figure. Tenant demand, lease structure, and asking rents relative to the local market all shape how a specific property experiences vacancy.

How Vacancy Affects NOI and Property Valuation

Vacancy connects directly back to the two things every commercial owner ultimately cares about: income and value. Higher vacancy reduces effective gross income, which reduces net operating income. Since property value is generally calculated by dividing NOI by a cap rate, a sustained increase in vacancy lowers value twice over, first by shrinking the income itself, and potentially again if buyers apply a higher cap rate to reflect increased perceived risk.

What Rising Vacancy Might Mean for Owners

A rising vacancy rate in your property type or submarket is worth paying attention to, but it does not automatically mean a bad investment or a doomed property. Context matters. Consider what it might signal for:

• Rent negotiations: Rising vacancy generally shifts leverage toward tenants, making aggressive rent increases harder to sustain.
• Tenant retention: In a softer market, retaining existing tenants often becomes more cost effective than chasing new ones.
• Property value: Sustained vacancy increases can pressure both income and cap rate assumptions, though a temporary uptick in an otherwise strong submarket may have limited impact.
• Leasing strategy: Owners may need to offer more competitive concessions or reposition the property to stand out.
• Capital improvements: Targeted upgrades can help a property compete in a softening market, provided they connect to real tenant demand.
• Investment decisions: A rising vacancy trend is a reason to dig deeper into local absorption and new supply data, not a reason to panic on its own.

Real World Example

Consider a hypothetical owner, Priya, who owns a small industrial building and notices that national industrial vacancy has ticked up slightly. Before assuming her property is at risk, she checks local submarket data and finds that new industrial supply in her specific area is minimal, while demand from regional logistics tenants remains strong. Her building, fully leased with two years remaining on its current lease, is well positioned regardless of the broader national trend. This illustrates why local, property specific context matters more than a single headline number.

Conclusion

The commercial property vacancy rate by property type tells a more useful story when you look past the headline number and into the specific submarket, building quality, and lease structure behind it.

National figures give you context for where the broader market stands, but your own property’s performance depends far more on its location, condition, and tenant relationships than on any single published percentage. Use the data as a starting point for questions, not as a final verdict on your investment.

FAQ

What is a normal commercial property vacancy rate? It depends heavily on property type. Industrial and retail have generally run in the mid single digits nationally, while office vacancy has been notably higher in recent years.

What is the difference between vacancy rate and availability rate? Vacancy rate measures currently empty space. Availability rate includes vacant space plus occupied space that is being actively marketed for lease.

Why is office vacancy higher than other property types? Shifts in workplace patterns since 2020 reduced demand for office space overall, though higher quality buildings have recovered faster than older ones.

Does a high vacancy rate always mean a property is a bad investment? Not necessarily. Local submarket conditions, building quality, and lease terms often matter more than a national vacancy figure.

How often is commercial vacancy data updated? Major research firms typically publish updated figures quarterly, though some markets get more frequent tracking than others.

Where can I find vacancy data for my specific city or submarket? Commercial brokerage research pages, local commercial real estate associations, and in some cases regional Federal Reserve Bank publications provide market specific data.

How does vacancy rate affect commercial property value? Higher vacancy reduces net operating income, which lowers value directly, and can also increase the cap rate buyers apply, compounding the effect.