Office vacancies are easing slightly across the U.S., but the bigger story is how the market is adjusting to a workforce that no longer uses offices the same way.
The national office vacancy rate landed at 17.8% in March, down 210 basis points year over year. Listing rates also declined, averaging $32.80 per square foot, roughly 2% lower than a year ago, according to Commercial Cafeโs latest report.ย
Most major markets are seeing gradual improvement. Of the 25 largest metros, 18 reported lower vacancy compared to last year. Even so, the recovery is uneven. Austin, for example, posted one of the largest drops in vacancy, falling 230 basis points, but still sits at 26.2%, the highest among major markets.
A smaller pipeline, slower growth
New development remains restrained. About 29 million square feet of office space is under construction nationwide, representing just 0.4% of total stock. Developers delivered 4.3 million square feet in the first quarter.
The composition of new projects is also changing. Traditional office construction has declined sharply over the past few years, while medical office development has gained share, now accounting for more than a quarter of new starts. Demand tied to healthcare employment and in-person services continues to support that segment.
Pricing pressure and discounted deals
Office sales activity is picking up, with nearly $12.8 billion in transactions across 549 deals in March. Pricing, however, reflects ongoing stress in the sector.
Discounted sales are increasingly common. In Los Angeles, more than half of office properties sold since the start of the year traded below previous prices, continuing a trend seen in 2025. One recent example saw a Pasadena office building sell for about 32% less than its prior sale price.
At the same time, high-demand markets still command premium pricing. San Francisco recorded some of the highest price-per-square-foot figures in the country, despite elevated vacancy.
Market leaders and regional splits
Investment activity is concentrated in a few major cities; Manhattan led the country with more than $1.8 billion in office sales so far this year, followed by Miami at $892 million and Dallas at $859 million.
Leasing and vacancy trends vary widely by region. Western and Northeastern markets tend to post higher rents, while Midwestern and Southern markets remain more affordable. Miami and Manhattan stand out for maintaining vacancy rates below the national average, signaling stronger demand in select urban cores.
Offices are being used differently
Even as vacancy improves, office utilization tells a different story. Physical occupancy averages around 55%, with daily attendance fluctuating between 38% and 66%, according to workplace access data.
That gap between leased space and actual usage is influencing how companies negotiate leases and how landlords position their buildings. Tenants are pushing for shorter terms, smaller footprints, and more flexibility in how space is used.
Coworking gains ground
Flexible workspace continues to expand its share of the market. Coworking inventory grew 16.5% year over year, reaching 164 million square feet and about 2.3% of total office stock.
Landlords are increasingly incorporating elements of the coworking model into traditional buildings, including flexible layouts, shared amenities, and service-based offerings. These adjustments are aimed at aligning office space with hybrid work patterns and fluctuating demand.
