For the data behind the commentary, download the full Q4 2025 U.S. Office Report.
Office Demand Is Building Momentum
Office market fundamentals began to improve in early 2024, when sublease inventories and vacancy increases peaked. By the second half of 2025, these positive signs had solidified into a clear recovery. Net absorption turned positive in the final six months of 2025 (+2.5 msf), marking the strongest back-to-back quarterly performance since COVID, aside from the brief rebound in early 2021. Higher-quality buildings drew even more attention, with Class A absorption near +3.5 msf in Q4 2025 and topping +9.2 msf for the full year.
After 12 straight quarters of negative absorption, U.S. demand has been positive for the past two quarters. While full-year net absorption in 2025 remained negative, at -6.7 msf, this represents a substantial improvement from the prior five-year average of -50.5 msf annually. Moreover, the weakness remained highly concentrated. Excluding the five markets that were the weakest, 2025 net absorption for the remaining 86 U.S. office markets tracked by Cushman & Wakefield Research would have been +11.1 msf.
Demand for office space appears to be growing, and it is also spreading geographically. Absorption was positive for the year in 50 U.S. office markets. That is up from 33 markets in 2024 and is the highest number of markets with positive absorption for a full year since 2019. There were seven markets with over 1 msf of positive absorption in 2025, led by Midtown Manhattan (+6.1 msf), San Jose (+3.1 msf), Dallas (+2.2 msf), Northern New Jersey (+1.6 msf), Cleveland (+1.3 msf), Midtown South Manhattan (+1.3 msf), and Austin (+1.1 msf). Another third of U.S. markets had positive absorption exceeding 100,000 sf in 2025.
In further signs of a spreading recovery, there are another 14 markets where demand was negative for the full year but turned positive in Q4 2025. This includes Boston, Denver, Detroit, Orange County, Puget Sound – Eastside, and Suburban Maryland.
Vacancy Stabilizing
In Q4 2025, 4 msf of new office space was delivered across the U.S. This is the lowest quarterly total since 2012. Improving demand and muted new construction meant that vacancy remained essentially flat QOQ, up just 5 bps. Vacancy in Class A buildings declined by 5 bps QOQ.
The overall national vacancy rate finished the year at 20.5%, up 30 bps from Q4 2024. This is the smallest year-over-year (YOY) increase in five-and-a-half years. Vacancy declined over the past 12 months in half of U.S. markets, and declines exceeded 100 bps in 17 different markets, including Kansas City, Northern New Jersey, Midtown Manhattan, Phoenix, Salt Lake City, San Jose, and Tampa.
The decline in vacant sublease availabilities is a large driver of firming occupancies. At 108.6 msf, the national inventory of sublease space is down 20% from its Q1 2024 peak. In 2025, sublease availabilities declined by 17.5 msf (a decrease of 14% YOY), and this strengthening was widespread with YOY declines occurring in over 60% of U.S. markets. Sublease availability drops exceeded 100,000 sf in three gateway markets—Manhattan (-3.8 msf), San Francisco (-1.5 msf), and Los Angeles (-112,000 sf)—as well as across a number of other noteworthy office markets such as San Jose (-2.8 msf), Dallas (-1.7 msf), Phoenix (-1.0 msf), Atlanta (-880,000 sf), Austin (-801,000 sf), Denver (-761,000 sf), Central New Jersey (-544,000 sf), Northern New Jersey (-419,000 sf), and Minneapolis (-319,000 sf).
Construction activity remains subdued as the amount of U.S. office space under construction dropped below 20 msf for the first time in the 21st century. The pipeline declined by 35% in 2025 and is now just 15% as large as it was when it peaked at 136 msf in Q1 2020. Total office inventory has in fact dropped by 20.7 msf over the past six quarters as demolitions and conversions have begun to outpace new construction deliveries.
For the data behind the commentary, download the full Q4 2025 U.S. Office Report.
