- CoStar now expects the national office vacancy rate to end 2026 at 13.6%, down from its prior forecast of 13.7%.
- Net absorption is forecast at 20 million SF in 2026 and 9 million SF in 2027, up from prior forecasts of 13 million SF and 5 million SF.
- Asking rents should rise 2.5% year over year for the next few quarters, then pass 3% late in 2027, driven mainly by the slowdown in new construction.
CoStar upgraded its U.S. office forecast, now expecting national vacancy to end 2026 at 13.6%, slightly better than its prior 13.7% projection.
Net absorption should reach 20 million SF this year and 9 million SF in 2027, up from the previous forecast of 13 million SF and 5 million SF.
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Rents Pick Up Speed
Asking rents across markets should grow 2.5% annually for a few more quarters, then speed past 3% as 2027 closes.
Phil Mobley, who runs CoStar’s national office analytics, said a slow, steady revival continues as supply adjustments offset historically weak demand growth.
Supply Does the Work
Mobley said rents have outperformed given high vacancy, likely because far less new space is being built, which keeps the best buildings tight.
The upgrade owes less to removing non-competitive space and more to the sharp slowdown in new construction, he said.
Downside Risks Loom Larger
Mobley said upside and downside are about equally likely, but a miss would be bigger. Sticky inflation and higher rates could slow the economy and trigger more corporate belt-tightening.
He also flagged AI. Faster adoption could lift productivity in knowledge work and cut demand for some types of office worker.
Why It Matters
The best buildings are doing the heavy lifting. We saw it over the summer, when owners including BXP, Kilroy, Cousins and Vornado described growing tenant urgency for top-tier space, as we noted in our look at premium office leasing. BXP cited rents 15% above last year in some Manhattan assets.
That fits CoStar’s read: scarcity in the best buildings, not broad demand, is doing the lifting.
What’s Next
The path depends on rates and the economy. If inflation and borrowing costs ease the downside risks, vacancy and rents could follow CoStar’s upgraded track through 2027.
