A model of vacancy rate determination is estimated using over thirty years of data for twenty U.S. office markets. The variances of individual city office vacancy rates are decomposed into common, time-varying components and city-specific fixed effects. City-specific persistence terms are also included to allow for lagged adjustment towards equilibrium. Three striking results are obtained. First, we find that the level of equilibrium is predominately determined by local, rather than national factors. Second, we find that it is the random shocks causing local deviations from equilibrium which reflect the integration across markets. Specifically, we find significant contemporaneous correlations of shocks across cities. Finally, the results depict a dramatic level of persistence in all markets. The model is then applied to determine whether the experience of the 1980’s represented a structural break in the underlying office market structure.