2026 Office Market Outlook and Highlights

Office Sector Gains Recovery Momentum
Amid Emerging Investment Tailwinds

Office properties continue to improve. Despite pandemic era headwinds, the office sector has demonstrated a slow, yet meaningful, recovery over the past two years. 

• Office market conditions remain relevant to investors because workplace patterns influence residential choices and, in turn, downstream demand for retail and industrial space.
• The fourth quarter of 2025 marked the seventh consecutive quarter of positive net absorption, with nearly 95 million square feet of space demand recorded for the year.
• After peaking at 17.2 percent in the first half of 2024, the national office vacancy rate declined to 16.3 percent by late 2025.
• Further improvement is forecast for 2026, with the national vacancy rate declining to 15.9 percent by year-end.
• Improving occupancy has been supported by a gradual return-to-office trend, with office attendance climbing to nearly 70 percent of pre-pandemic levels in 2025.
• While occupancy improvements have shifted year to year since 2024, office occupancy is projected to rise in 36 of the 50 major U.S. markets.

Capital markets adjust to new pricing benchmarks. Deal flow has strengthened as repricing, higher cap rates, and evolving investor participation reshape the office investment landscape.

• Private investors remained the most active participants in the office acquisition market in 2025, accounting for 54 percent of all transactions, while institutional buyers increased their share to 23 percent from 18 percent in the prior year
• Although office transaction velocity remained 6 percent below the 2014-2019 average, deal flow improved substantially in 2025 with a 21 percent annual increase in sales activity.
• A key driver of this trend has been the repricing of office assets, as prices declined on average 32 percent from 2021 to 2025.
• Meanwhile, the average office cap rate has expanded to 7.5 percent, though significant variation persists across markets, with top-performing assets trading near 6 percent.

Highlights of the leading office markets. Select metros benefit from low vacancy, sustained office attendance, and minimal supply pressure to outperform national benchmarks.

• Fort Lauderdale, Miami-Dade, and West Palm Beach rank strongly, supported by low vacancy and some of the highest office attendance rates in the country.
• Raleigh stands out for its limited new supply, a projected 30 basis-point vacancy decline, and expected asking rent growth of 1.1 percent in 2026.
• Tampa-St. Petersburg ranks highly, with vacancy anticipated to fall to 11.1 percent and asking rent growth expected to reach 3.3 percent, building on 2.2 and 3.0 percent rent gains from in 2025 and 2024 respectively.
• New York City's momentum is expected to continue in 2026, with an additional 70 basis-point vacancy decline and forecast asking rent growth of 2.8 percent.
• Looking ahead, limited construction and rising return-to-office trends suggest improving conditions for office assets as investors reassess opportunities in the sector. 

*Average office visitation per quarter indexed to pre-pandemic. Dec. 2019 = 100
Sources: Marcus & Millichap Research Services; Placer.AI; Real Capital Analytics; CoStar, Inc