After years of uncertainty, U.S. office landlords and commercial real estate firms are seeing demand rebound, with leasing activity reaching levels last seen in 2019, according to CoStar. Cities like San Francisco are leading the way, while technology and AI companies are signing larger, longer-term leases, driving occupancy rates upward.
Major Firms Post Record or Near-Record Results
Hudson Pacific Properties, CBRE, Cushman & Wakefield, JLL, and Marcus & Millichap all reported strong gains in office leasing and property sales. CBRE and Cushman achieved their highest third-quarter leasing revenue ever, while Marcus & Millichap posted its first quarterly profit of the year. The trend is expected to continue into 2026.
Vacancy Rates Begin to Stabilize
Although the national office vacancy rate remains high at 14%, CoStar research indicates that it may have peaked. Rising leasing activity and stronger tenant commitments are gradually closing the gap between occupied and leased space.
Limited New Supply Boosts Landlord Advantage
A historically low construction pipeline is intensifying competition for quality office space. Only 8 million square feet of new office space has been added since the start of 2025, the lowest annual net completion rate since 2011.
This shortage is expected to make the market increasingly favorable to landlords.
Second- and Third-Tier Markets See Growth
Corporate tenants are expanding beyond gateway cities, signing larger leases in smaller markets. This broad-based demand is benefiting brokerages and supporting revenue growth across major commercial services firms.
Returning to a Landlord’s Market
With office attendance rebounding to 80% of pre-pandemic levels and companies scaling back remote work, the U.S. office market is approaching an inflection point. Analysts anticipate an occupancy boost of roughly 10 million square feet over the next year, signaling a transition toward a more landlord-favored market.
