The office market continues to be challenged by return-to-office uncertainties, with vacancies expected to crest over the next few years. 

Office vacancies dropped faster in the second half of last year than many experts predicted, falling by 30 basis points in the third quarter and by another 10 basis points in Q4. The national vacancy rate ended the year at 18.1% and is now 40 basis points lower than what Moody's Analytics analysts say "may well be" the pandemic peak of 18.5% recorded in Q2 2021.

"Asking and effective rents were basically unchanged at the national level," Moody's Kevin Fagan and Xiaodi Li write in a new analysis, and ended the fourth quarter at $34.46 PSF and $27.74 PSF, respectively. Meanwhile, "year-over-year asking and effective rent growth rates of -0.2% and -0.8% paint the picture of a tumultuous period, with both types of rent posting positive (if marginal) increases in the middle of the year," the pair note.