US Office Demand Turns Positive for First Time Since 2019

Net Absorption Is Back in the Black

For the first time since 2019, U.S. office users took more space than they relinquished. Newmark’s latest data shows net absorption—move-ins minus move-outs—swung positive in 2025, with tenants committing to roughly 12.5 million square feet more than they shed over the year. 

Momentum accelerated late in the year, too: about 9.5 million square feet of positive absorption landed in Q4 2025, a sharp contrast to the –30 million square feet recorded in Q4 2020. CoStar’s research further indicates the market may have passed peak vacancy, reinforcing the turn.

Vacancy Eases as Deal Flow Improves

After hitting a record 14.2% in 2025, the national vacancy rate has edged down to about 14%, according to CoStar. While activity hasn’t fully returned to pre-pandemic levels, leasing volume is clearly improving—roughly 12 million square feet of deals were signed in Q3 2025, the strongest quarter since 2019. 

CoStar’s Phil Mobley notes that job growth is translating into larger, steadier transactions, even if overall employment gains remain modest. Newmark’s read: broad-based cutbacks stabilized in 2025, ending the prolonged stretch of occupancy losses.

Landlord Sentiment Turns Up

Owners active in high-demand submarkets are already seeing the shift. BXP reported 5.5 million square feet of leases in 2025, lifting its portfolio leased rate to 92.5%. CEO Owen Thomas expects the tailwind to carry into 2026 as companies grow and leasing accelerates beyond 2025 levels. 

Sun Belt-focused Cousins Properties struck a similar tone: the firm views conditions as nearing an inflection point that could tilt the market back toward landlords. With construction at historic lows and ~20 million square feet annually being removed from inventory, scarcity is building in select segments.

Flight to Quality Widens the Split

The rebound isn’t evenly distributed. Tenants continue to favor newer, best-in-class space, deepening the gap between premium product and older, less competitive buildings. That preference is shaping where and how deals get done. 

For example, BXP secured a significant lease with Starr at 343 Madison Avenue by matching a high-specification asset with a brand-name user’s requirements. Several large landlords—including Cousins, BXP, and Vornado—expect demand for top-tier options to intensify as deliveries stay muted. 

Some foresee a shortage of premier space emerging by 2028 and beyond if development pipelines remain thin.

Outlook: Recovery Builds Into 2026

Taken together—positive net absorption, easing vacancy, stabilizing demand, and limited new supply—the office market cleared a key hurdle in late 2025. Markets large and small are benefiting from clearer workplace policies and a return to proactive portfolio planning. While analysts don’t anticipate a dramatic, immediate drop in vacancy, the trajectory is improving. 

If corporate growth continues and supply stays constrained, 2026 is poised to extend the gains—and give well-located, high-quality assets the edge.