For the data behind the commentary, download the full Q3 2026 U.S. Office Report.
Leasing Activity Remains Strong; Vacancy Inflects Downward
Tenants remain active in the market. Net absorption was slightly positive in Q3 2026 (+50,000 sf), and the four-quarter rolling total hit +15.5 msf. National vacancy has tightened over the past year and now sits at 19.8%.
The market has clearly hit an inflection point, with momentum building and the demand fundamentals improving. Sublease space availabilities led the way, starting to shrink in early 2024. Net absorption followed suit. Overall absorption has been positive for five straight quarters and Class A absorption has been positive for seven of the past eight quarters. Vacancy stabilized in 2025 and has declined 30 bps from its Q3 2025 peak.
The recovery is broad-based, with fundamentals improving across a majority of U.S. markets:
- Net absorption has been positive over the past year in 52 of the 92 U.S. office markets tracked by Cushman & Wakefield Research.
- Four-quarter rolling absorption has exceeded 1.0% of inventory in one-fourth of markets.
- Vacancy has declined YOY in over half of markets.
- Sublease availabilities declined YOY in two-thirds of markets.
The recovery is evident across markets of all sizes. Four-quarter net absorption has exceeded 500,000 sf in 15 U.S. markets, including eight with gains exceeding 1.0 msf: Midtown Manhattan (+6.5 msf), San Francisco (+3.5 msf), Orange County (+2.7 msf), Dallas (+2.4 msf), San Jose (+2.3 msf), Midtown South Manhattan (+1.8 msf), Phoenix (+1.7 msf), and Charlotte (+1.2 msf). On a percentage-of-inventory basis, four-quarter rolling absorption exceeded 1.5% in Rochester, Tucson, Syracuse, Salt Lake City, Louisville, and Miami.
Overall vacancy has declined by over 100 bps YOY in a fourth of U.S. markets. The largest YOY drops have occurred in gateway and gateway-tangential markets such as San Francisco (-410 bps), Orange County (-280 bps), Midtown Manhattan (-260 bps), Midtown South Manhattan (-240 bps), San Mateo County (-150 bps), and Long Island (-140 bps). Additionally, significant declines in vacancy have occurred in Tucson (-280 bps), Rochester (-270 bps), Charlotte (-250 bps), Des Moines (-200 bps), Louisville (-190 bps), and San Antonio (-170 bps).
After shrinking for 10 straight quarters, sublease availabilities are back to 2020 levels. Sublease inventories fell YOY in 63 U.S. markets, with 10 markets down by more than 500,000 sf. The largest YOY declines were in San Francisco (-2.8 msf), San Jose (-2.3 msf), Dallas (-1.9 msf), Midtown Manhattan (-1.5 msf), and Minneapolis/St. Paul (-1.2 msf).
Better Buildings Outperforming the Rest of the Market
Many occupiers continue to prioritize high-quality office environments, reflecting a broader focus on workplaces that are driving engagement and facilitating employee development. This preference is evident in leasing activity: Class A buildings accounted for two-thirds of total leasing volume in Q3 2026, well above the 10-year average of 61%.
Class A fundamentals are also improving faster than the broader market. Class A vacancy declined by 10 bps QOQ and 60 bps YOY. Vacancy fell in 53 markets and by more than 100 bps in over one-third of U.S. markets.
The largest YOY drops exceeded 400 bps in Tucson, Buffalo, Memphis, Orange County, Kansas City, Columbia, SC, and Las Vegas. Several major office markets also recorded significant declines, including Midtown South Manhattan (-390 bps), San Francisco (-360 bps), Midtown Manhattan (-320 bps), Charlotte (-240 bps), and Dallas (-230 bps).
Construction Activity Ticks Up but Remains Historically Low
New office construction remains scarce. Through three quarters, 2026 deliveries totaled 7.1 msf, the lowest three-quarter total in more than 30 years. Deliveries have averaged 12.2 msf per quarter since 2000, but none of the past three quarters has topped 2.5 msf. Over the past year, only four markets have delivered new space equaling more than 1.0% of their inventory: Cleveland, Puget Sound Eastside, Austin, and El Paso.
The construction pipeline, however, appears to have bottomed out. With 23 msf of office space under construction, the pipeline is up 20% from its Q1 2026 nadir of 19.1 msf. It remains thin, though: before 2025, the pipeline had not fallen below 23 msf since 1997.
For the data behind the commentary, download the full Q3 2026 U.S. Office Report.
