{"id":68504,"date":"2026-02-15T13:51:00","date_gmt":"2026-02-15T19:51:00","guid":{"rendered":"https:\/\/coydavidson.com\/?p=68504"},"modified":"2026-02-16T00:56:13","modified_gmt":"2026-02-16T06:56:13","slug":"u-s-office-market-report-q4-2025","status":"publish","type":"post","link":"https:\/\/coydavidson.com\/coydavidson\/u-s-office-market-report-q4-2025\/","title":{"rendered":"Recovery Spreading to Additional U.S. Office Markets"},"content":{"rendered":"\t\t
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U.S. Office Market Outlook Report | Q4 2025<\/strong><\/h2>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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The U.S. office market ended 2025 with renewed momentum and increased activity in more markets. This is expected to continue into 2026 as companies across all industries have settled into post-pandemic operations. Leasing and investment decisions<\/a> in 2026 will be hyper-focused on the local market, with greater evaluation and understanding of the driving fundamentals and forecasts.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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U.S. Office Market Overview<\/strong><\/h2>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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The U.S. office market is beginning to show early signs of recovery in many major metros as core fundamentals stabilize. Nationally, the vacancy rates have begun to decline. Stronger demand for high-quality, amenitized space continues to lead the rebound, supported by increased office attendance. While recovery remains uneven and highly divided by asset quality and location, the broader trend is that the market may be gradually strengthening as supply pipelines shrink, tenancy improves, and fundamentals stabilize.<\/p>

Vacancy is decreasing across the country as the development pipeline reaches historical lows and a large number of obsolete buildings are removed for conversion. More than 100M SF of space has been removed from the national inventory in 2025. The removal of noncompetitive space has had positive impacts on many markets, while tenant demand remains focused on the top tier of space. More than 50% of markets are moving towards recovery, with only a handful having experienced additional occupancy losses this year. Manhattan continued to lead the country, with record-high absorption and pre-pandemic leasing volume. Dallas and Silicon Valley saw additional growth in 2025, while Boston and Detroit experienced growth in the fourth quarter to offset losses throughout the rest of the year.<\/p>

The spread of return-to-office mandates across all industries is boosting many local office markets. More firms that had shed space to cut costs a few years ago are now expanding to accommodate all employees in the office. The peak days for office occupancy are Tuesday, Wednesday, and Thursday. Mondays and Fridays have significantly lower occupancy nationwide. <\/span><\/div>
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Uncertainty about macroeconomic conditions is driving employers to hold steady, remain lean, and rely more heavily on technology to fill vacancies when possible. How this approach will affect office space needs in the long term is uncertain, and many experts expect it to be a pause in hiring rather than a full-scale elimination of jobs or functions.<\/span><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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CAPITAL MARKETS: INVESTMENT RISING<\/strong> <\/span><\/h4><\/div>
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Office investment has continued to rebound, with total volume of $73.3 billion in 2025, up 15.8% from the previous year. While this figure remains 50% lower than the $142.2 billion in transactions in 2021, the growth in 2025 marks the second consecutive annual increase in volume. Properties traded reached 4,820, up 10% from 2024.<\/span><\/div>
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The Bay Area recorded the largest year-over-year increase in office investment, driven by heightened leasing from AI companies, with transactions totaling $8.1 billion \u2014 an impressive 126.1% increase from 2024. Improvements in office leasing fundamentals nationwide are fostering cautious optimism for a sustained recovery. Investors are finding distressed sales, acquiring properties at a discount, and making capital improvements to attract new tenants. In multiple markets, buildings are being traded in anticipation of redevelopment, as non-competitive properties are earmarked for conversion to alternative uses.<\/span><\/div>
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LOOKING AHEAD<\/strong><\/h4>
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The U.S. office market ended 2025 with renewed momentum and increased activity in more markets. This is expected to continue into 2026 as companies across all industries have settled into post-pandemic operations. <\/span><\/div>
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Leasing and investment decisions in 2026 will be hyper-focused on the local market, with greater evaluation and understanding of the driving fundamentals and forecasts. Companies continue to evaluate all of their real estate holdings and leases, looking to improve efficiency by upgrading to newer buildings or spaces when possible. These decisions will continue to divide the market\u2019s property classes. <\/span><\/div><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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SUBLEASE AVAILABILITY<\/strong><\/h4>
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Sublease availability continued its decline, to 173.6M SF by the end of 2025, 5.4% below last quarter and 16.4% below one year ago. It peaked at 237.9M SF in mid-2023 and has declined in every quarter over the past 2.5 years.<\/span><\/div>
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Multiple factors have contributed to this decline. As many spaces had their terms expire, landlords have taken them over and are advertising for lease, slowing the decline in overall availability.<\/span><\/div>
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Nationally, dozens of older Class B and C buildings have been removed from the office inventory for conversion, further reducing the rate. The diminishing development pipeline has spurred new interest in sublet space in the top tier of the market, especially for large blocks.<\/span><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t
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Market Fundamentals<\/strong><\/h2>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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NET ABSORPTION<\/strong><\/h4><\/div>