What Is Happening to Unused Office Space From the Rise in Remote Work?

Unused office space is being handled through smaller leases, subleases, redesigned workplaces, and conversions to housing or other uses. Which option makes sense depends on the building’s layout and condition, its location, local demand, and the cost of changing it. Remote and hybrid schedules have reduced the need for a dedicated desk for every employee, but offices can still support collaboration, training, client meetings, and other work that benefits from gathering in person. Some offices are occupied but lightly used, while others have no tenant at all, and those situations call for different responses. The shift affects employers managing leases, property owners seeking tenants or new uses, and communities that depend on downtown workers and businesses.

Why More Office Space Is Sitting Empty

When employees work remotely for some or all of the week, organizations may need fewer assigned desks and less permanent office space. Many still need places for collaboration, client meetings, training, secure work, and workplace connection. As a result, businesses increasingly assess space by how often it is used and whether it supports the work employees need to do, rather than treating square footage as a fixed measure of growth.

This shift creates a gap between the amount of office space under lease and the number of people using it. In early 2025, U.S. office vacancy was around 20%, while physical occupancy was estimated at 50% to 55%, according to PropertyCasualty360 reporting that cited RentCafe and Yardi Research. These figures describe different conditions: vacant space has no tenant, while an occupied office can still be lightly used on a typical day.

Lease commitments can also outlast changes in workplace patterns. A company may keep paying for space after its workforce becomes more distributed, consolidate satellite offices, or move from several locations into one smaller workplace. Some tenants choose a more desirable building with less space, while older or less adaptable properties may struggle to attract occupants.

What Can Happen to an Underused Office?

There is no single outcome for an underused office. The best option depends on the building’s layout, location, condition, financing, and local market. It also depends on whether the owner can fund changes. Tenants can alter how they use leased space, but decisions about renovating or converting the building generally rest with the owner.

Employers Can Reduce, Share, or Redesign Their Space

For tenants, the first response is often to change how space is leased or used rather than alter the building. Employers may let leases expire and move into smaller offices, sublease unused floors, or combine several locations. They may also replace assigned desks with shared workstations, add rooms for meetings and collaboration, or coordinate attendance so the space is used more effectively.

A smaller office can still work well if it supports the times employees gather. However, concentrating too many people in a reduced footprint on the same days can create crowding and limit access to rooms or desks. Before changing a lease or layout, employers need to understand when teams come in and which tasks benefit from in-person work. They should also assess whether the space can support those activities.

Building Owners Can Upgrade or Reposition Properties

Owners may renovate shared areas, improve building services, or modernize suites to compete for tenants. With more space available, prospective tenants may have greater ability to seek features that suit hybrid work. These could include flexible layouts, updated amenities, or meeting technology. A location that makes commuting worthwhile may also be an advantage.

These pressures can widen the divide between buildings. A well-located property that can be refreshed may continue to attract tenants, while a building with outdated systems, deep floor plates, or expensive maintenance needs may have a harder time. An empty floor brings in less rental income, even as the owner remains responsible for upkeep, utilities, security, insurance, and financing. Depending on the circumstances, that pressure can lead an owner to negotiate, invest in upgrades, sell, or consider a different use.

Why Some Offices Become Apartments

Converting an office building to housing is one of the most visible responses to surplus office space. RentCafe data reported by PropertyCasualty360 indicated that approximately 90,300 apartment units were planned to come from office conversions in 2026. The report also noted that financial pressure and government-backed incentives were helping accelerate some projects. Planned units are not the same as completed homes, and the figure does not mean every vacant office is suitable for conversion.

Building design strongly affects whether conversion is practical. Narrower floor plates and plentiful windows can make it easier to create homes with natural light. Adaptable plumbing risers can also help because apartments need kitchens and bathrooms in locations that differ from typical office layouts. Older buildings in weaker leasing markets may be candidates when the cost of bringing them up to modern office standards is difficult to justify.

Why Conversion Is Not Simple

An office cannot usually become housing just by adding kitchens and bedrooms. Residential use calls for a different arrangement of windows, plumbing, ventilation, elevators, fire-safety features, and living areas. On a wide office floor, interior space may be too far from natural light to work well as housing. This can make some layouts impractical even with substantial investment.

The project must also make financial sense. Expected residential income needs to justify construction and financing costs. The outcome depends on the building’s condition, project expenses, and local housing demand. For these reasons, conversions are more feasible in some markets and buildings than in others.

What Other Uses Can Replace Offices?

Housing gets much of the attention, but it is not the only possible reuse. Depending on local demand and the building’s characteristics, former office space may be adapted for hotels or extended-stay lodging, education and training, medical or wellness services, flexible workspaces, or retail, dining, and entertainment. Some projects combine homes with services and work areas.

Each alternative has its own limits. A location that suits offices may not attract hotel guests, residents, or customers for other uses. A new concept still needs enough demand to support it. Repurposing can help a building and its surrounding area adapt, but it is not an automatic fix for a weak downtown market.

How Employers Can Decide What Space They Need

For employers, unused space is also a workforce-planning question. Before renewing a lease, reducing space, or redesigning an office, leaders can assess which roles need regular in-person work and which activities benefit most from gathering. They should consider how many people use the office on its busiest days. They should also assess whether the layout supports focused work and collaboration, along with the cost of keeping space that is rarely used.

The aim is not to require attendance simply to justify a lease, nor to eliminate offices without considering the value of in-person connection. A workplace plan should align the space with the organization’s operating model, employee needs, and budget. Clear communication also matters so employees understand hybrid expectations and know where and when teams will meet. Virtual meeting practices can help teams collaborate remotely when colleagues are not in the same office.

The Office Is Changing, Not Disappearing

Large offices filled every weekday no longer fit every employer or building. Some space will be leased again, some workplaces will shrink or be redesigned, and some properties will become apartments or mixed-use projects. The outcome depends on how well a building can serve a new or continuing purpose. Treating office space as adaptable infrastructure helps employers and owners respond to how people work now rather than assuming every building must retain its former role.

*This article is for general informational purposes only and is not legal advice.