19.8% US office vacancy rate in Q1 due to hybrid work models, downsizing, and Federal Reserve interest rate hikes.

US office vacancies hit a record 19.8% in Q1 as needs evolve with hybrid work models, according to Moody's Analytics. The commercial real estate sector has been impacted by tenants downsizing and the Federal Reserve's interest rate hikes, with the struggles already sending vacancy rates past historic peaks in 1986 and 1991. The trend has led to discussions about converting office spaces into apartments, particularly in downtown markets.