After several challenging years, the U.S. office market is showing clearer signs of stabilization. Leasing volumes are rising, Class A absorption has turned positive, and recovery is spreading across a growing share of markets. At the same time, sublease availability is shrinking and new construction has slowed, easing supply pressures and supporting healthier occupancy levels.
Key Takeaways
Demand for top-tier office space is accelerating, marking the strongest Class A absorption since early 2020 as companies move from downsizing to expansion across high-quality buildings.
The broader U.S. office market is gaining traction, with half of all markets now seeing positive absorption—a sharp rise from just one-third two quarters earlier as demand continues to broaden nationwide.
Supply pressures are easing sharply, with sublease availability down 14.5% since early 2024 and new construction deliveries cut in half year over year—now just 38% of the decade average.
Top-Tier Offices Lead Market Rebound as Tenants Prioritize Quality
High-quality office space continues to outperform the broader market as companies seek to enhance in-office engagement and employee experience. Class A absorption has been positive for 2 consecutive quarters, with rolling four-quarter absorption turning positive in Q3 2025 for the first time in over three years—reaching its strongest level since 2020. Nearly 60% of markets have seen gains in Class A demand, underscoring a clear shift toward premium, amenity-rich environments. As the market becomes increasingly quality-driven, vacancy is concentrated in older, less competitive buildings, while tightening availability in newer assets is beginning to push demand further down the Class A spectrum.
New Office Construction Falls to Historic Lows, Easing Supply Pressure
Office development has slowed to its lowest level in over a decade, marking a sharp pullback from the 2020 construction peak. Only 13.4 msf of new space has been delivered year-to-date—down 50% from last year—and just 22.5 msf remains under construction, the smallest pipeline of the 21st century. With new starts and deliveries declining, limited new supply is helping stabilize occupancy and ease competitive pressure across the U.S. office market.
Outlook:
Demand continues to strengthen, particularly for high-quality buildings, as vacancy stabilizes, sublease space declines, and new construction slows—pointing to limited future supply. While office employment growth remains moderate, vacancy appears near its peak, and as prime space fills, demand is extending to upgraded Class A and well-located Class B assets. This evolving landscape is creating opportunities for owners and investors alike, with many upgrading existing assets to meet tenant expectations or repositioning properties for alternative uses—such as residential, hospitality, or data centers—to unlock new community and investment value.
Sources:
U.S. Office Market Dynamics, Q3 2025
Commercial Snapshot Q3 2025 | Old Republic Title
U.S. Office MarketBeat Reports | US | Cushman & Wakefield
2026 commercial real estate outlook | Deloitte Insights
August 2025 Commercial Real Estate Market Insights
U.S. Leading Office Markets | Q3 2025 | Colliers
Office investor demand was way up in the first half of 2025, according to exclusive JLL data
