Office Recovery Trend Strengthens in Major US Cities

Office recovery gains traction as US cities see rising absorption, lower vacancy, shrinking sublease space, and limited new supply.

April 8, 2026

Jordan B.

Office recovery accelerates, with 57 US markets posting positive absorption over four quarters.
National vacancy rate held steady at 20.2%, with 46 of 92 tracked markets recording declines.
Sublease space has dropped 25% from its Q1 2024 peak, led by major reductions in San Francisco and Midtown Manhattan.
Office construction pipeline has shrunk to a historic low, with total stock down 0.7% in five quarters.

Key Takeaways

Momentum Builds in Key Markets

Globe St reports that US office recovery is gaining traction as Cushman & Wakefield’s Q1 2026 data reveals notable improvements in major cities. Midtown Manhattan, Midtown South, San Francisco, and Dallas led with the highest office absorption, signaling a shift from broad decline to selective growth. Over the last year, 57 markets posted positive office absorption, up significantly from 2024.

Vacancy and Sublease Space Declining

While the national office vacancy rate remained steady at 20.2%, it showed minimal annual growth—the smallest uptick since 2020. Nearly half of tracked markets saw vacancy decrease, and top performing regions, including Orange County and Austin, posted meaningful improvements. Sublease space also shrank, dropping 101M SF across 52 markets, with sharpest contractions in San Francisco, Dallas, and Midtown Manhattan. In key urban cores like Manhattan, stronger leasing activity has played a direct role in reducing sublease availability and stabilizing fundamentals.

Construction Pipeline Hits Historic Lows

New office construction has slowed sharply. Completions fell 40% year over year. Active development now represents just 0.3% of total US supply. Meanwhile, market adjustments reduced total office inventory. Conversions, demolitions, and repositioning removed about 38M SF over five quarters. Twenty office markets recorded inventory declines of at least 1% since last year.

What’s Next

Office recovery is expected to remain uneven, though conditions are improving in many major markets. As new supply stays muted and existing spaces are repurposed, positive absorption and falling vacancy should provide further support for stabilization in select US office markets. The outlook for office recovery depends on continued adaptation and demand growth in core cities.