Small Businesses May Fill Office Vacancies

As office vacancies surge post-pandemic, small businesses may help compensate for the empty space, according to a study by Flatworld Solutions.

“The commercial real estate market in 2024 has experienced a notable downturn,” notes the study. “The price index decreased by 10% in one year.” As of the start of this year, the commercial price index was $314,720. Additionally, the first quarter of the year has seen record-high delinquency rates on commercial real estate loans.

Amid an uncertain commercial landscape, search trends increased by 52% for “private office” since 2021, while “office for rent” searches declined by 14%.

The increased search for small and private offices, along with an increase in searches for “business idea,” may suggest a new trend where small businesses fill the former spaces of large offices.

The number of small businesses created since 2020 further supports this possibility, as the amount of new small businesses has almost doubled since the pandemic. On average, there are 129.9 applications for new businesses per 100,000 inhabitants per month.

In Pennsylvania, that number is 84.16 per 100,000. In April, the commonwealth saw 10,909 business applications alone.

“The findings highlight the difficult landscape of commercial real estate in 2024, with decreasing prices and escalating delinquency rates,” the study concludes. “Amidst these challenges, the growing interest in flexible workspaces and the surge in small business creation underscore evolving market dynamics and opportunities for innovation.”