At their simplest, vacancy rates are calculated by adding the total rentable square footage in office buildings divided by the total amount of space. And yet, different firms who publish vacancy rates rarely come up with the same figures.

For the first quarter of 2024, Colliers published an overall vacancy of 12.3% for St. Paul’s central business district. Avison Young said 19.1%, while Cushman & Wakefield reported 27%. The St. Paul Building Owners and Managers Association’s (BOMA) had the highest rate at 31.5%, even though that group initially reported a much lower figure.

How can four sources produce such wildly different figures for the same area? To start, not everyone has the same definition of downtown, or any other local region, for that matter.

“It gets a lot more complicated as you start thinking about all of the nuances of different building types and classes, geography,” said Jesse Tollison, a research analyst at Colliers.

When defining geographic markets, each of the firms used major corridors as guidelines for classifying central business districts. Avison Young relies on the local expertise of their brokers as well as borders based on interstate highways, said analyst Joe Stockman.

Cushman & Wakefield considers St. Paul’s central business district to be the area blocked off by I-35E, I-94, West Kellogg Boulevard and encompasses the office buildings immediately across the Mississippi River, said director Patrick Hamilton. Office buildings outside of those boundaries are grouped separately because they are more likely to compete with suburban office buildings in Roseville, Maplewood, and Shoreview.

“Everybody’s got different boundaries of where they think the competitive metro geography ends,” Hamilton said.

Aside from geography, firms sometimes use different source material. Commercial real estate listing services like CoStar and Catalyst, for instance, are valuable resources for finding actual vacancies, Tollison said. Brokers with the company are often in the know about upcoming vacancies, but news articles and reaching out to businesses directly are also helpful, he added.

Tollison said he and other researchers are invited to be part of the Minnesota Commerical Association of Realtors’ Research Advisory Board, through which analysts call every financial quarter and exchange information about vacancy and absorption.

Avison Young relies on a “mixed bag of sources” to get an accurate representation of the market, from brokers’ conversations with property managers to articles, press releases, rent rolls, and subscription-based listing services, said market analyst Joe Stockman.

Cushman & Wakefield looks at data from subscription-based listing services, but it uses the data as “guideposts” rather than including it in quarterly reports, said Director Patrick Hamilton. Almost all of its numbers come from reaching out to brokers and checking the accuracy of availability, square footage, and move-out dates.

Hamilton said the firm has internal quarterly meetings going over vacancies, leases, and availabilities, ensuring that all information is consistent.

As a smaller organization, BOMA prides itself on community and tends to be more hands on, said President Tina Glassman.

BOMA began using Catalyst last year to track vacancies, but prior to that, most of the information was gleaned from directly asking property managers how much available space they had, Glassman said. The change has given BOMA more credibility, but the organization continues to double check accuracy with property managers or brokers.

“There’s always a risk in self-reporting,” Glassman said.

Axios reported Madison Equities did not inform BOMA of 610,000 square feet of vacant office space, making downtown St. Paul’s vacancy rate 31.5%, not 22.5% published in BOMA’s annual report.

BOMA includes a caveat with its reports that it includes self-reported information, but Glassman said Madison Equities is not a member and does not have the same relationship as other building owners.

Colliers’ quarterly report accounts for buildings with more 10,000 square feet, bringing its vacancy rate lower than competitors, Tollison said. Smaller buildings tend to have much higher occupancy rates and are more likely to only have one tenant, he said.

Cushman & Wakefield tracks buildings with more than 20,000 square feet because it becomes more difficult to track, and smaller buildings tend to be mixed-use, making the office component of those buildings less competitive, said Director Patrick Hamilton.

Avison Young’s cutoff is 15,000 square feet because anything lower is less relevant to the market, said analyst Joe Stockman.

Including owner-occupied properties is another factor that drives up vacancy rates, particularly at a time when companies are reevaluating how much space they really need, Tollison said. Colliers includes properties like the Blue Cross Blue Shield, Thompson Reuters, and Best Buy campuses, all of which have recently downsized their previously single-tenant offices, because they are relevant to the market in terms of their sales and redevelopment, he said.

Stockman said including owner-user properties gives Avison Young a “pretty comprehensive capture” of the market though they do temper vacancy rates as they are 100% occupied.

Cushman & Wakefield plans to track single tenant buildings starting in the first quarter of 2025, also because of the volume of corporate office space available on the market coming out of the pandemic, Hamilton said.

Sublet vacancies are trending down because people wanted out of their pandemic leases as they reassess the amount of space they need, but now the subletters are taking over the lease and changing the rates, Stockman said.

“Since the pandemic, we’ve seen a lot of interesting movement and vacancy numbers just because of the need for office space, the need catering to your hybrid workforce and your return to office policies,” he said.

Colliers reports on direct and overall vacancies, as distinguishing between the two can push rates up: if a tenant subleases half of their space, overall vacancy would reflect that change, Tollison said.