Office Leasing Momentum Signals Recovery in US Market

Leasing Activity Outpaces Reductions

US office tenant demand has shifted into positive territory, as leasing volume now exceeds space reductions for the first time since 2019, per CoStar. National net absorption topped 12.5M SF in 2025, largely driven by leasing activity in key markets like Manhattan. This marks a pivotal point in the office sector’s post-pandemic journey, with momentum carrying into 2026.

Vacancy Stabilizes as Demand Recovers

Office leasing momentum has helped push the national vacancy rate down to 14%, after peaking at a record 14.2%. Although overall leasing remains below pre-pandemic levels, the last quarter of 2025 saw 9.5M SF of positive absorption. Analysts point to stabilized demand and fewer space cutbacks, signaling that the period of major reductions is largely over.

Premium Space Drives Market Dynamics

The split between modern, high-quality buildings and older assets continues to widen as office tenant demand concentrates on premium properties. Major landlords such as BXP, Cousins, and Vornado expect leasing strength to persist, given construction of new product is at all-time lows and premium space is becoming scarce. BXP recently reported a notable uptick in leasing volume, underscoring this flight-to-quality trend that continues to shape tenant decisions. With roughly 20M SF annually being removed from inventory, experts anticipate renewed activity and possible shortages of Class A space by 2028 and beyond.