A new study by The Kaplan Group presents its 2025 analysis of office building data in major US financial districts, building on findings from its 2024 edition to reveal how market risks have evolved over the past year. By comparing changes in liquidity, vacancy, and growth across cities, this updated report identifies districts most at risk for large-scale loan defaults or office firesales, as well as those that have seen improvement over the last 12 months.
Key Takeaways
- While Days On Market (DOM) fell from 515 to 228 days and vacancy growth decelerated from 12.7% to 3.7%, the average vacancy rate still rose from 13.9% to 14.9% across all Financial Districts.
- 2025 leaders on low risk were Hartford (Rank 1), Miami (Rank 2), and Jacksonville (Rank 3).
- The highest-risk markets were Houston (Rank 19), San Francisco (Rank 18), and Chicago (Rank 17).
Financial Districts Risk Ranking and Score
A financial district is typically a central area in a city where financial services firms such as banks, insurance companies, and other related finance corporations have their headquarters. In major cities, these districts often feature skyscrapers and important financial utilities like stock exchanges and regulatory authority offices, making them significant financial centers. They are also offering a large number of office spaces.
The time it takes to rent offices varies significantly from city to city, but most financial districts have improved over a year. Leading the list, offices in Houston (555 median days on market) Des Moines (517), and New Orleans (422) require well over a year. Salt Lake City (272), Philadelphia (264), and Chicago follow and are also above the national median DOM (208), while all the remaining financial districts are under that threshold.
We created a score to evaluate which financial districts are more at risk of foreclosure due to the struggle to fill empty offices. The scoring system evaluates cities based on three key metrics: Median Days on Market, Vacancy Rate in the metropolitan area, and Vacancy Rate Growth. The final score is calculated using a weighted sum of these normalized values, providing a comprehensive measure of market conditions.
Higher scores indicate a higher risk for financial districts to not be able to fill empty offices. We applied the same methodology to 2024, enabling a direct comparison of scores and ranks between 2024 and 2025.
Top Five (Lower Risk)
- Hartford (Risk score =0.18)
- Miami (0.19)
- Jacksonville (0.23)
- New York (0.30)
- Philadelphia (0.31)
Bottom Five (Higher Risk)
- Houston (0.78)
- San Francisco (0.59)
- Chicago (0.46)
- Boston (0.46)
- Des Moines (0.45)
City Spotlights
- Hartford: Very short DOM; balanced vacancy and growth; strong liquidity and improving fundamentals.
- Miami: Low vacancy and controlled growth; DOM is average but occupancy strength offsets this.
- New York: Solid mid-range DOM; better-than-average vacancy; improving growth dynamics.
- Chicago: Slower DOM; elevated vacancy; limited pricing power despite some growth improvement.
- San Francisco: High vacancy + negative growth factors; decent DOM but remains high risk.
- Houston: Weak across both DOM and vacancy; elevated execution and downtime risk.
- Seattle: DOM sharply better than 2024. Vacancy is still high, but growth has slowed meaningfully, signaling stabilization. Seattle’s rank improved from the 3rd riskiest Financial District in 2024 to the 10th riskiest in 2025.
2024 vs. 2025 Comparison
Key Changes
- Liquidity Improved: Median DOM fell in many markets, signaling faster deal velocity and reduced downtime risk. On average, it fell from 599 to 219 days.
- Deterioration Slowed: Vacancy growth decelerated broadly—still high in some cities, but pace of loosening moderated. It decelerated from 11.8% to 2.3%. The average vacancy rate rose from 13.5% to 13.9%.
- Risk Dispersion Widened: Leaders improved across both DOM and vacancy growth; laggards retained high vacancy and slower clearing.
Data by Financial Districts
Methodology
Data Sources
- Crexi: Provided listing-level Days on Market (DOM) data.
- NAR: Supplied vacancy rates and year-over-year vacancy growth figures.
Scoring Approach
- Each metric (DOM, vacancy, vacancy growth) is normalized using a min–max scaling method for comparability across cities and years.
- Scores are combined in a composite index where lower values indicate lower risk, using the following formula:
- 40% DOM
- 40% Vacancy
- 20% Vacancy Growth
Ranking Process
- Cities are ranked by their composite score, with rank 1 indicating the lowest risk.
- Year-over-year movement is tracked to highlight evolving risk profiles and market changes.
