Office leasing activity jumped sharply in early 2026, marking the busiest quarter for landlords since before the pandemic.
New data from CoStar shows tenants signed roughly 120 million square feet of leases in the first quarter, a 25% increase year over year and the strongest quarterly total since 2018.
Smaller Deals Fuel the Comeback
The surge isn’t coming from large corporate expansions. Instead, it’s being driven by a higher volume of smaller leases, a pattern that has taken hold since the pandemic, according to BisNow.Â
Lease sizes have remained about 15% below pre-2020 levels since 2023, reflecting slower hiring and limited availability of large blocks in newer buildings. Shorter lease terms and more flexible agreements are also contributing to higher deal volume.
The result: more transactions, even if individual footprints are smaller.
Recovery Uneven Across Markets
Nearly half of the largest U.S. office markets are now within 10% of their pre-pandemic leasing averages. Some cities have moved beyond prior benchmarks, including Charlotte, New York City, Miami, and San Francisco.
Financial firms are playing a key role in that recovery. Banks and financial institutions, which have maintained higher in-office attendance, are driving demand in certain markets—particularly in Charlotte, where major firms have expanded their footprints.
Other metros continue to lag. Cities like Atlanta, Washington, D.C., Chicago, Denver, Seattle, San Diego, and Philadelphia remain well below pre-pandemic leasing levels.
Momentum Faces Uncertainty
Despite the strong start to the year, the pace may not hold. Economic uncertainty, slower job growth, and rising energy costs tied to geopolitical tensions are expected to weigh on demand.
At the same time, return-to-office efforts appear to be reaching a plateau, limiting further upside from companies bringing workers back.
The office market is active again, but it looks different. Smaller, shorter, and more flexible deals are now driving activity, pointing to a more cautious and fragmented recovery rather than a full return to pre-pandemic norms.
