US Office Leasing Hits Its Strongest Quarter Since Before the Pandemic
Office leasing activity in the United States just posted its best quarterly showing of the post-pandemic era—driven largely by a surge in smaller transactions, even as the broader recovery remains uneven across markets.
Q1 2026 Leasing Volume Reaches a New High
Office tenants signed an estimated 120 million square feet of new leases in Q1 2026, the highest quarterly total since before the pandemic. That figure is 25% higher than Q1 2025 and marks the first time this decade that quarterly leasing volume has exceeded the 2015–2019 average. It’s also the strongest performance since mid-2018, a notable benchmark given how varied the recovery has been by market and building quality.
This estimate reflects new lease commitments only. Renewals are excluded, since they typically have limited impact on net occupancy.
The Story Behind the Volume: More Deals, Not Bigger Deals
While the headline number signals momentum, the makeup of Q1 activity reinforces a trend that has defined the office market since the pandemic: leasing is being pushed forward by deal count, not a return of blockbuster transactions.
In fact, the number of office lease transactions in Q1 was the highest observed in a decade. At the same time, average deal sizes remain smaller. Since early 2023, the average size of new office leases has stayed about 15% below pre-pandemic norms, and that pattern has continued into 2026.
Two forces are limiting larger deals:
- Conservative hiring plans, which reduce the need for major expansions
- Less availability of large, contiguous blocks in newer, premium buildings—making it harder for big users to find suitable relocation options
Why Move-In-Ready Spec Suites Are Winning
As large deals become harder to execute, tenants with smaller requirements have stepped in. Many are choosing shorter-term commitments in fully built-out spec suites, which allow faster occupancy without major upfront capital investment.
This shift is helping explain why leasing volume can rise even when average deal size remains compressed: more companies are leasing smaller spaces, more often, and moving faster.
Recovery Is Real—but Uneven Across Markets
Over the past 12 months, leasing volumes in nearly half of the 20 largest U.S. office markets have recovered to within 10% of pre-pandemic averages. But several major metros are still operating at least 20% below late-2010s leasing levels, underscoring how uneven the rebound remains.
Financial Services Are Powering Several Strong Markets
Some of the strongest leasing markets continue to benefit from financial services demand. Charlotte and New York both posted leasing volumes well above their pre-2020 averages, supported by steady demand from banks and other financial institutions—groups that have generally maintained higher in-office attendance and more stable headcounts.
New York has also been aided by continued leasing from technology firms tied to artificial intelligence, strengthening its demand base.
San Francisco’s Bounce Is Tech-Led
On the West Coast, technology demand is fueling San Francisco’s leasing rebound, helping reabsorb space and reduce sublet availability—another indicator of improving conditions in a market that has been closely watched.
A Standout “Big Deal” Example: JPMorgan in Boston
Boston, which had been among the slower large markets to regain momentum, received a notable boost from a rare large transaction: JPMorgan Chase took roughly 250,000 square feet at the newly delivered South Station Tower, occupying more than eight floors. That deal runs counter to the broader trend toward smaller lease sizes—but shows that high-quality inventory can still attract major commitments when the right option exists.
What Could Limit the Next Phase of Growth
Maintaining results like Q1’s could prove challenging, due to constraints on both supply and demand.
Supply-side constraints
Prime, large-block availability is limited. As a result, deals like JPMorgan’s may become less frequent, and some large occupiers may be forced to stay in place because viable relocation options are scarce. That could support occupancy—but reduce the churn that typically creates additional leasing volume.
Demand-side constraints
Return-to-office trends appear to be reaching their peak, while job growth remains modest. Rising energy costs tied to the conflict with Iran are another potential headwind to economic growth—and by extension, office demand.
The Tradeoff: High Leasing Volume vs. Higher Renewals
There’s also a structural twist: smaller leases tend to carry shorter terms, which can keep deal flow elevated through frequent rollover. That dynamic could help leasing volume stay near—or even above—current levels.
However, if tenants increasingly choose to renew in place, especially in a market with limited alternatives, occupancy may improve without a corresponding increase in new leasing volume.
Bottom line: the U.S. office market just delivered a major quarter, but the next phase will be shaped by the same forces driving today’s activity—spec suites, smaller footprints, premium flight-to-quality demand, and a recovery that varies sharply by market and building class.
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