U.S. office vacancy is falling, but a large wave of maturing loans could keep financial pressure on property owners through 2028.
Yardi Matrix data show that about 14,000 office properties have loans that recently matured or are due to mature by the end of 2028. The loans total $289.2 billion, or 33.5% of office loan volume. Nearly 59% originated before 2021, when lenders were operating under very different office-market conditions.
With interest rates still elevated, hybrid work firmly established and demand concentrated in higher-quality buildings, refinancing could become more difficult for owners facing loan maturities, according to Commercial Cafe.
Vacancy Is Improving, but Recovery Remains Uneven
The national office vacancy rate reached 17.8% in August, down 90 basis points year over year. Thirteen of the 25 largest markets tracked also recorded lower vacancy than a year earlier.
Manhattan had the lowest vacancy among those markets, at just over 10%, after a 340-basis-point annual decline. Class A buildings there had a 9% vacancy rate, compared with 12.2% for Class B and 14.3% for Class C properties.
Still, eight of the 25 markets had vacancy above 20%. Those high-vacancy markets collectively face $61.6 billion in maturing office loans.
Seattle had a 24.7% vacancy rate, with 70.1% of its $8.3 billion in maturing loans originating before 2021. San Francisco’s vacancy reached 25.9%, while 55.1% of its $12.6 billion in maturing loans dated to before 2021. Houston also had vacancy above 20%, at 23.6%, and $7.3 billion in loans approaching maturity.
Delinquencies and Discounted Sales Add Pressure
Office loan distress is already visible in commercial mortgage-backed securities. Trepp reported that the office CMBS delinquency rate reached 12% in August.
Property values are also under pressure. Nearly half of repeat-sale office properties over recent years changed hands below their previous sale prices. In central business districts, 73% of properties with at least two comparable sales have traded at a discount since 2024, compared with 48% of urban properties and 42% of suburban properties.
The strain is not uniform. Atlanta’s average office sale price so far in 2026 was about $158 per square foot, 32.8% below its 2022 peak, though 7.1% below 2019 levels. In June, Real Capital Solutions bought the 650,000-square-foot office building at 101 Marietta St. for $49.5 million, about 28% below its 2015 sale price.
Construction Remains Concentrated
The U.S. office construction pipeline totaled roughly 32.4 million square feet in August. Manhattan, Boston and Dallas each had more than 3 million square feet underway, together accounting for more than 32% of the national total.
New construction in central business districts has contracted sharply. Yardi data put the CBD pipeline at 2.7 million square feet, down 61.3% year over year. By comparison, urban development outside CBDs totaled 17.2 million square feet, while suburban projects accounted for 12.4 million.
National asking rents averaged $33.20 per square foot in August, up 1.7% from a year earlier. Manhattan led year-to-date office sales with more than $5.1 billion, followed by the Bay Area at $3.4 billion and Dallas at $3 billion.
Office Employment Adds Another Complication
Office-using sectors lost a combined 24,000 jobs in August, according to Bureau of Labor Statistics data. On a year-over-year basis, employment in those sectors was down 62,000, or 0.2%, even as total nonfarm employment grew 0.4%.
Phoenix was an exception at the metro level: office employment rose 1.3% year over year in July, its strongest annual growth since mid-2022. Gains in information and professional and business services helped drive the increase, alongside activity tied to semiconductor investment.
The combination of maturing debt, elevated borrowing costs and uneven demand leaves office owners facing very different refinancing conditions depending on their market and property. Falling national vacancy offers some relief, but it does not remove the pressure building around loans coming due.
