Coworking Gains Ground Within Stabilizing U.S. Office Market, Yardi Research Finds

Patterns of vacancy, leasing, and new construction are beginning to stabilize in the U.S. office market, while coworking continues to carve out a competitive niche. Yardi Research’s latest analysis of major metro markets captures these changes, offering a clear snapshot of where office space demand, pricing, and development stand. 

The findings highlight which regions are leading in sales and construction, where rents are rising or falling, and how flexible office solutions are impacting tenants and investors alike. 

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Vacancy Rates Slide While Construction Levels Off

After hitting peaks in early 2025, the national office vacancy rate eased to 18.4% by December, down 140 basis points year-over-year. Listing rates remained largely stable at $32.86 per square foot, less than 1% below the previous year. Nearly 31 million square feet of office space was under construction, marking a modest pipeline compared with previous years.

Coworking spaces continue to grow, now making up roughly 2.2% of the national office market. Their flexibility appeals to companies avoiding long-term leases but still seeking a physical workspace, giving owners of large office properties a potential strategy to fill vacancies through partnerships with coworking operators.

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Regional Trends: Markets Diverge on Vacancy and Pricing

Western U.S. – Cities like Los Angeles and San Diego had some of the lowest vacancies in the region, while Seattle topped the charts with over 27% vacant. San Francisco and the Bay Area saw vacancy drop to 25.2% and 23.2%, respectively. San Francisco led in asking rents at $63 per square foot, followed by the Bay Area at $53, with Los Angeles and San Diego above $45. The Bay Area also led office sales, totaling $4.7 billion for the year.

Midwestern U.S. – Twin Cities recorded the lowest vacancy at 18%, with Minneapolis-St. Paul and Detroit offering some of the most affordable office rents in the country ($21–$27 per square foot). Chicago had the highest rents in the region ($28.30) and led in sales volume at $1.1 billion, though prices averaged just $65 per square foot. Construction activity slowed, with just over 800,000 square feet underway across the region.

Southern U.S. – Miami, Austin, and Washington, D.C. carried most of the development pipeline. Miami commanded the highest asking rents at $55 per square foot, with Austin ($46) and Washington, D.C. ($40) also above the national average. Vacancy rates in Austin (27%) and Dallas (21%) remained elevated. Together, Dallas, Austin, and Miami accounted for nearly 16% of the national office construction pipeline.

Northeastern U.S. – Manhattan and Boston dominated both sales and construction. Manhattan closed 2025 with the lowest vacancy among top markets (13.6%) and the highest asking rates ($68.40 per square foot). Its office sales totaled $7.8 billion, averaging $498 per square foot, while Boston added 4.4 million square feet of office under construction. These two markets alone accounted for nearly 22% of the national development pipeline.

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Transactions and Prices Highlight Recovery

Office sales totaled more than $53 billion nationwide in 2025, with the average sale price approaching pre-pandemic levels at $192 per square foot. Manhattan led the nation in both total sales value and price per square foot ($498), followed by the Bay Area ($392). Chicago, Portland, and Philadelphia recorded the lowest prices, averaging under $100 per square foot.

Construction Pipeline Stabilizes

Construction starts slowed in 2025, with 13.2 million square feet of office space breaking ground, nearly flat from 2024. The decline follows a multi-year trend as hybrid work reshapes demand and large office buildings face challenges filling vacancies. Investment and leasing activity remain concentrated in higher-quality, amenity-rich properties, while older, larger buildings continue to struggle.

Office Employment: Modest Growth

Overall office-using employment grew by just 0.1% over the past year, adding roughly 42,000 jobs. Charlotte, N.C., led growth with a 3.3% increase, driven by a business-friendly environment, low cost of living, and expanding corporate presence.

Outlook

The U.S. office market is showing signs of stabilization after multi-year uncertainty. Vacancy rates are declining in major metros, construction is leveling off, and coworking continues to gain share as a flexible alternative to traditional office space. 

Markets with high-quality properties and strategic locations are attracting the most investment, suggesting selective optimism for the year ahead.

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