Why Empty Office Towers Are Reshaping Global Cities

Since the post-pandemic shift toward remote and hybrid work, demand for office space has sharply declined in many cities. By 2025, what began as a temporary trend has become a structural transformation: vacancies are rising, rental prices are falling, and both investors and municipal budgets face growing uncertainty. In cities like San Francisco, Chicago, and New York, office vacancy rates reached 20–30% by the end of 2024 — the highest levels in three decades. In London, according to CBRE, vacancy rates for central Class A offices rose 60% between 2023 and 2025.

The problem goes far beyond business—it affects the entire urban economy. The first consequence is falling property values. As values decline, property tax revenue shrinks, directly impacting municipal budgets and public services such as transportation, parking, sanitation, and lighting. In New York, for example, office property taxes generated $6 billion annually in 2020. If prices fall 25% and vacancy rates hit 30%, annual revenue losses could reach $1–1.5 billion.

The second consequence is the hollowing out of urban cores. Office districts previously functioned during business hours, but with declining foot traffic, restaurants, transportation, and retail lose customers. Central neighborhoods become less vibrant and more vulnerable. In San Francisco, this is already visible as tech companies reduce physical office presence and street-level activity declines.

Some cities are experimenting with office-to-residential conversions, but it’s rarely simple. In Vancouver, a 15% tax incentive supports office-to-housing conversion. Similar initiatives exist in Brussels and Berlin. Yet most office buildings are poorly suited for housing due to space layouts, lighting, and ventilation standards, while conversion costs often exceed new construction costs.

This process is becoming increasingly relevant for Tbilisi as well. Although Georgia’s office vacancy rates remain lower than in global hotspots, signs of gradual growth are emerging. According to TBC Capital’s 2024 report, Class A office vacancy in Tbilisi reached 10%, with total office market vacancy around 12%. Cushman & Wakefield data shows that by Q3 2024, Class A vacancies reached 11%, while B class vacancy was at 8%. In the local market, Class A refers to modern business centers that meet high international standards — including recent construction, energy efficiency, advanced engineering systems, safety features, prime locations, and full-service packages. While Tbilisi’s total office stock remains relatively small — approximately 172,100 m² across A and B classes — converting even 20% of vacant space into residential units could theoretically create several thousand new apartments, offering some relief in a housing-constrained city.

By 2025, empty offices have become a genuine test of urban policy. Cities must take bold political steps, simplify regulations, and create attractive incentives for investors. The core question remains: can these vacant business spaces be successfully transformed into vibrant new neighborhoods — or will they remain long-term symbols of urban decline and economic inertia?