U.S. Office Market: Stabilization Is Taking Hold, but the Recovery Is Selective

After several years of uncertainty, the U.S. office market is beginning to show clearer signs of stabilization. The recovery, however, is not happening evenly across buildings, markets or tenant segments.

According to a recent REBusinessOnline analysis, approximately 115 million SF of new office leases were signed nationally during Q2 2026. While leasing remains about 9% below the 2015–2019 quarterly average, activity has improved substantially from the lows experienced in 2020 and 2021.

National vacancy has also started moving in the right direction. The U.S. office vacancy rate is approximately 18%, down about 50 basis points year-over-year. Meanwhile, average asking rents reached approximately $38.06/SF, representing a 2.3% annual increase.

The Bigger Story: Flight to Quality

The headline vacancy number does not tell the entire story.

Tenants are increasingly concentrating demand in newer, well-located and amenity-rich Class A properties that can help companies attract employees back to the workplace.

Class A office space recorded approximately 4.4 million SF of net absorption during Q2, bringing the four-quarter total to 24.5 million SF — approaching pre-pandemic levels.

This suggests that the office market is becoming increasingly bifurcated. High-quality properties may experience improving occupancy and stronger tenant demand even while older or less competitive buildings continue to struggle.

Positive Absorption Is Spreading

Another encouraging indicator is absorption.

The national office market recorded approximately 16.9 million SF of positive net absorption during Q2 2026, marking the eighth consecutive quarter of positive absorption. Nearly three-quarters of U.S. markets reportedly posted positive absorption for the year.

Some markets are recovering particularly well. Manhattan led the country with approximately 5.5 million SF of year-to-date absorption, while San Francisco recorded approximately 2.1 million SF, supported in part by growing demand from AI companies.

Limited New Construction Could Help Rebalance the Market

Perhaps one of the most important longer-term trends is happening on the supply side.

New office construction has fallen to a 14-year low, with only approximately 15.6 million SF delivered nationally over the past four quarters. Less than 22.8 million SF remains in the U.S. ground-up construction pipeline.

That slowdown matters.

With significantly fewer new buildings entering the market, continued leasing and absorption can gradually work through existing vacancy. In stronger submarkets, limited new supply could eventually create tighter conditions for the highest-quality office space.

What This Means for Owners and Investors

The question is increasingly becoming less about whether the office market will recover and more about which properties will participate in that recovery.

For owners and investors, building quality, location, amenities, tenant experience and capital requirements are becoming increasingly important differentiators. Well-positioned assets may benefit from improving demand and limited future construction, while functionally obsolete properties could face continued leasing pressure and require significant repositioning.

The office market is not returning to its pre-pandemic structure. Instead, it is evolving into a more selective market where quality and location increasingly determine performance.

New Edge CRE Perspective

For investors, this environment may create opportunity — but broad market statistics should not drive investment decisions.

The stronger strategy is to evaluate office assets property by property and submarket by submarket, focusing on tenant demand, competing inventory, lease economics, replacement cost, capital requirements and the property's ability to remain competitive over the next cycle.

The national numbers suggest the office market is stabilizing. The next phase will be about identifying which assets are positioned to outperform as that recovery continues.

Source: REBusinessOnline, What’s Next for the U.S. Office Market?, August 4, 2026.

https://rebusinessonline.com/whats-next-for-the-u-s-office-market/