Dr. Gleb Tsipursky – The Office Whisperer
Nirit Cohen – WorkFutures
Angela Howard – Culture Expert
Drew Jones – Design & Innovation
Jonathan Price – CRE & Flex Expert
The U.S. office sector continues to recalibrate in late 2025, with vacancy easing only marginally, construction activity remaining subdued, and performance diverging sharply across regions.
October’s national vacancy rate held at 18.6%, down 90 basis points year-over-year, while average listing rates stayed essentially unchanged at $32.81 per square foot, according to Commercial Cafe’s latest report.
Construction Pipelines Stay Thin Despite Large Market Imbalances
At the start of November, just over 33 million square feet of office space was under construction nationwide. Only Boston, Manhattan and Dallas surpassed the 2-million-square-foot mark.
Limited development persists even as Manhattan posted the highest year-to-date sales volume in the country at $6.4 billion, followed by the Bay Area with $4.4 billion and Washington, D.C., with $3.6 billion.
Vacancy levels varied sharply: Manhattan and Miami were the tightest major markets in October at roughly 13%, while Sun Belt metros such as Austin saw rates approach 27%.
Hybrid Work Patterns Reshape Local Trajectories
Remote work levels continue to fall from pandemic highs, but a full return to pre-2020 office utilization remains unlikely. The disparity across metros illustrates how local economies and development activity shape recovery.
Austin had one of the highest remote-work shares last year — around 23% — yet also posted the highest physical office occupancy in early November at 74.6% of pre-pandemic levels. Manhattan, by comparison, saw less remote work but lower physical occupancy at 57.4%.
Austin’s aggressive construction cycle — about 16% of stock delivered since 2021 — outpaced even its strong job growth and sent vacancy soaring, finally pressuring rents downward for the first time this decade.
In contrast, Manhattan’s far smaller supply growth relative to its market size, paired with steady investor interest, helped push vacancy to 13% and maintain the nation’s highest sale prices per square foot.
Listing Rates and Vacancy: National Metrics Mask Local Strength
National averages have held steady, but several markets broke from broader softness. Charlotte’s vacancy rose to nearly 19%, yet the market remains supported by years of above-average office-using job growth and more than 7 million square feet delivered since 2021.
Meanwhile, year-to-date U.S. sales reached nearly $43 billion through October, closing at an average of $191 per square foot. Denver showed the sharpest pricing reset: after peaking near $300 per square foot in 2022, assets traded for an average of $125 per square foot this year, with downtown towers selling at steep discounts compared to prepandemic valuations.
Los Angeles Returns to Selective, Trophy-Oriented Development
Los Angeles maintains one of the lowest vacancy rates in the West, in part due to a dramatic slowdown in construction after 2020. New groundbreakings now skew toward highly amenitized, premium projects intended to draw top-tier occupiers.
Century City’s 37-story tower at 1950 Avenue of the Stars is among the few large projects underway, with plans for more than 700,000 square feet and significant preleasing from major tenants.
Other large-scale investments include ongoing redevelopment and media-focused expansions across the studio lot landscape.
Western Markets Struggle With High Vacancy and Diverging Rent Levels
Most Western metros recorded vacancy above the national average in October. Seattle led the region at 27.4%, followed by San Francisco at 26% and the Bay Area and Denver near 23%. Despite elevated vacancy, San Francisco still commands the highest asking rents in the West at more than $65 per square foot — double the national average — while the Bay Area approached $52.
Los Angeles and San Diego also posted premium pricing, each well above $40 per square foot. Conversely, Phoenix, Denver and Portland were the only major Western markets with asking rates below the national average.
Midwest Remains One of the Nation’s Most Affordable Regions
Midwestern markets continue to offer some of the lowest asking rents and sale prices in the country.
Detroit held the lowest regional listing rates at under $22 per square foot. The Twin Cities remained below the national vacancy average and posted rents just above $27. Chicago led the region in pricing at more than $28 per square foot but recorded the lowest average sale price — $64 per square foot — among major Midwestern markets.
Construction has cooled substantially, leaving less than 1 million square feet underway across the region.
Southern Markets Show Wide Pricing Spread and Heavy Texas-Biased Construction
Miami, Austin and Washington, D.C., posted the Southern region’s highest asking rents in October, all above $40 per square foot. Miami also recorded the lowest vacancy in the South at 13.4%. Orlando, Houston and Tampa represented the most affordable end of the spectrum, each below $30 per square foot.
Sales activity remained concentrated in Washington, D.C. ($3.6 billion), Dallas ($2.5 billion) and Atlanta ($1.2 billion). Construction continued to cluster in Texas: Dallas led with 2.6 million square feet underway, Austin followed at 1.6 million square feet, and Houston added another 1.3 million.
Miami was the only other Southern market exceeding 1 million square feet.
Northeast Dominates High-Pricing and Large-Pipeline Categories
Manhattan maintained the highest listing rates in the region at around $68 per square foot; Boston followed at nearly $49. Philadelphia was the only Northeastern market with rates below the national average.
Boston led the region in active construction with roughly 4.7 million square feet underway, while Manhattan followed with nearly 3 million — together accounting for nearly one-quarter of national construction.
Manhattan also recorded the highest year-to-date sales in the U.S., reaching $6.4 billion at an average of $523 per square foot. Boston and New Jersey trailed at roughly $1.2 billion and $1.1 billion in sales, respectively.
Office-Using Employment: Growth Slows, but Some Metros Still Gain Share
Private-sector data shows office-using sectors lost a combined 21,000 jobs in September, though still up 197,000 year-over-year. Over the longer term, nine of the top 20 metros increased the share of office-using jobs since 2020.
Austin saw the strongest shift, with office roles rising to roughly 30% of local employment — a 190-basis-point gain — while Orlando, Miami, Dallas and Tampa recorded the next largest increases.
A Market Still Searching for Equilibrium
With construction restrained, vacancy gradually stabilizing, and hybrid work firmly embedded in corporate planning, the office sector is unlikely to see rapid correction.
Markets with disciplined supply pipelines and diverse job growth continue to outperform, while high-development metros face slower recoveries. Creative reuse, conversions and flexible workspace models are increasingly becoming essential tools in bridging the demand gap.
