U.S. office demand strengthened again in the second quarter of 2026, with leasing activity rising, vacancy falling at its fastest pace since 2015, and office investment continuing to recover, according to new CBRE data.
Demand Continues To Build
Net absorption nearly doubled from the previous quarter to 12.6 million square feet, extending the office market’s streak to nine consecutive quarters of positive demand. Over the past year, tenants absorbed 38.9 million square feet of office space.
Leasing activity also accelerated, climbing 16% year over year to 62.4 million square feet in Q2. Over the past 12 months, leasing reached 243 million square feet, putting the market on pace to surpass 2022’s record annual total.
Vacancy Falls As Prime Offices Lead Recovery
The national office vacancy rate declined 30 basis points to 18.3%, marking the largest quarterly drop in more than a decade. Prime office buildings outperformed the broader market, with vacancy falling to 12.3%.
Midtown Manhattan remained one of the country’s tightest office markets, where prime vacancy dropped to just 2.2%.
New Supply Remains Limited
Construction activity continued to slow, with the office pipeline shrinking to 15.4 million square feet—87% below its 2020 peak. Developers completed only 2.2 million square feet during the quarter, contributing to the lowest first-half completion total since CBRE began tracking the market in 1990.
The limited supply helped support rental growth. Average asking rents increased 2.6% year over year to $37.58 per square foot, the fastest annual increase in six years.
Investment Recovery Continues
CBRE expects total office investment volume to rise 16% in 2026 as private and institutional investors continue returning to the sector. While investment activity has improved since 2023, transactions involving the largest office properties remain below pre-pandemic levels.
The report suggests office fundamentals continue to strengthen as tenant demand rebounds while limited new construction constrains future supply.
