Those were the four cities mentioned in a new Yahoo Finance report detailing how landlords are "having a tougher time filling their empty office buildings with new tenants", citing data from CoStar and JP Morgan. 

The glut is a result of overbuilding while interest rates were lower, the report says, noting that Houston and Dallas "put up more new office space between 2010 and 2021 than all regions except New York". Even more alarming is the fact that they have "millions more square feet under construction", Yahoo says. And despite discounting, vacancies are now highest in those two cities compared to any other metro area. 

Houston and Dallas had 18.8% and 17.2% of office space vacant at the end of last year, respectively. The national average is 12.5%, with New York, San Jose, San Francisco, and Chicago posting vacancy rates of 12.3%, 12%, 16.4%, and 15.1%, Yahoo wrote. 

The vacancies in Houston and Dallas come not only despite aggressive discounting, but even as both cities have had better luck with employees returning to the office than other cities. For example, worker attendance was 60% in Houston and 50% in Dallas, as of the first week in April 2023. Those figures are higher than cities like New York and San Jose. 

About $1 billion in outstanding commercial mortgage backed security loans in Houston, secured by office properties, are coming due this year, Yahoo writes. Dallas faces and aggregate of over $1 billion in maturities by 2024, as well. 

Itziar Aguirre, CoStar's director of market analytics for Houston, commented: "Refinancing risk over the near term is high and it's gonna be really tough because interest rates are so high. There's gonna be a lot of foreclosures. I think there's gonna be bankruptcies. There's gonna be a lot of distressed sales."