A fragmented demand recovery and persistent economic uncertainty continue to weigh on the U.S. office sector. National vacancy edged up to 14.1% through Q3 2025, with only half of major metros posting net absorption gains over the past year. Leasing activity is shifting toward smaller tenants and shorter terms, while premium and value assets outperform mid-tier buildings.
Return-to-office momentum is building, largely driven by increased attendance among hybrid workers, though remote work levels remain unchanged. New York leads the recovery, with office attendance nearing 85% of pre-pandemic levels, while smaller cities continue to face elevated givebacks.
Construction activity has slowed sharply, with just 59.5 million square feet under construction, the lowest since 2012, and future deliveries expected to remain historically low. Institutional capital is cautiously reentering the market, signaling possible renewed confidence, but values for traditional multi-tenant buildings remain deeply discounted. The outlook remains balanced, with in-office trends and labor market conditions likely to determine whether the sector is nearing a turning point or settling into a more selective normal.
National office real estate trends
- Vacancy in Class A space stands at 20.9%, while Class B vacancy is 12.5%.
- Leasing volume in Q3 2025 approached pre-pandemic levels, but deal sizes remain about 15% smaller than the 2015–2019 average.
- Rent growth is expected to remain near 1% annually, as elevated concessions and sublease inventory continue to weigh on pricing.
- Only 25 million square feet were delivered in 2025. There is a chance that total net deliveries will fall short of the previous record low set in 2011.
- The current 59.5 million square feet under construction is the lowest since early 2012.
- National office vacancy continues to rise, reaching 14.1% in Q3 2025, with stabilization not expected until late 2026 as job growth slows and demand remains concentrated in top-tier space.
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Information contained in this report is provided, in part, from third-party sources, including the U.S. Bureau of Labor Statistics, the Bureau of Economic Analysis, Engineering News-Record, and CoStar Group. Even though obtained from sources deemed reliable, no warranty or representation, expressed or implied, is made as to the accuracy of the information herein.
