Top-Quality Space Leads Broadening Office Market Recovery
Source: CBRE Research, Q2 2026.
Net Absorption Accelerates as Office Recovery Broadens
Source: CBRE Research, Q2 2026.
Net absorption nearly doubled quarter-over-quarter in Q2 to 12.6 million sq. ft., marking the ninth consecutive quarter of positive demand. Over the past four quarters, net absorption totaled 38.9 million sq. ft.
Leasing Activity on Track to Exceed 2022 Levels
Source: CBRE Research, Q2 2026.
Leasing activity rose by 16% year-over-year in Q2 to 62.4 million sq. ft. and by 4% over the past 12 months to 243 million sq. ft. CBRE estimates that annual leasing activity will surpass 2022 levels, currently the highest on record.
Vacancy Falls at Fastest Pace Since 2015
The overall office vacancy rate fell by 30 basis points (bps) in Q2 to 18.3%, the largest quarterly decline since 2015. Prime vacancy outpaced the broader market, dropping by 40 bps to 12.3%. Midtown Manhattan’s prime vacancy rate declined further to just 2.2%.
Construction Pipeline Remains at Record Low
Source: CBRE Research, Q2 2026.
The under-construction pipeline fell slightly to 15.4 million sq. ft., down by 87% from its Q2 2020 peak. Only 2.2 million sq. ft. of space was completed in Q2, contributing to the lowest H1 level since CBRE began tracking this metric in 1990.
Rent Growth Outpaces Historical Averages
Average asking rent increased by 2.6% year-over-year to $37.58 per sq. ft., the fastest pace in six years and above the 30-year average. The spread between asking and taking rents narrowed to 10.1% but remained wider than the 8.6% spread in 2019.
Office Investment Volume Continues to Rise
Total office investment volume is expected to increase by 16% in 2026, continuing the market recovery. Private and institutional investors have increased their office holdings since 2023, although deal activity for the largest properties is still well below 2018 and 2019 averages.
Top Markets by Overall Inventory – Vacancy and Leasing
*Manhattan prime vacancy rate is for Midtown only.
Source: CBRE Research, Q2 2026.
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