U.S. office vacancy continued to decline in the third quarter of 2026 as leasing activity increased and asking rents recorded their fastest annual growth since 2016, according to CBRE’s latest office market report. Meanwhile, new construction is on track to reach its lowest annual level since tracking began in 1990.
Office Leasing Reaches Highest Level Since Late 2024
Net absorption totaled 4.9 million square feet in Q3, marking the 10th consecutive quarter of positive demand. Absorption over the past four quarters reached 29.2 million square feet, up from 27.3 million in the previous 12-month period.
Leasing activity increased 4% year over year to 63.8 million square feet, its highest quarterly total since Q4 2024. Annual leasing reached 244 million square feet, up 2% over the past 12 months. CBRE expects full-year activity to exceed the 2022 record.
The overall office vacancy rate fell to 18.2%, its fifth consecutive quarterly decline. Prime office vacancy dropped to 11.9%, while Midtown Manhattan’s prime vacancy rate stood at just 1.9%.
Office Construction Heads for Record Low
Office construction completions fell 76% year over year to 1.5 million square feet in Q3. With 4.7 million square feet completed so far this year, 2026 is on track for the lowest annual total since CBRE began tracking completions in 1990.
The under-construction pipeline edged up to 20.1 million square feet, largely due to new projects in Manhattan and Miami. Even with the increase, it remains 84% below its peak in Q2 2020.
Asking Rents Rise at Fastest Pace in a Decade
Average asking rents increased 3.1% year over year to $37.95 per square foot, outpacing the 30-year average annual growth rate of 2%. The gap between asking rents and the rents tenants actually pay narrowed slightly to 9.9%, but remained above the 8.6% spread recorded in 2019.
Office Investment Forecast to Reach $91.1 Billion
CBRE forecasts that U.S. office investment volume will rise 10% in 2026 to $91.1 billion, based on activity during the first three quarters. Private and institutional investors have increased their office holdings since 2023, although investment activity for the largest properties remains well below 2018 and 2019 averages.
