Solid Leasing Keeps Office Market Recovery on Track
Source: CBRE Research, Q3 2026.
Net Absorption Positive for 10th Consecutive Quarter
Source: CBRE Research, Q3 2026.
Net absorption moderated to 4.9 million sq. ft. in Q3 following a strong Q2, marking the 10th consecutive quarter of positive demand. Net absorption over the past four quarters totaled 29.2 million sq. ft., up from 27.3 million sq. ft. in the prior four-quarter period.
Leasing Activity on Track To Exceed 2022 Record
Source: CBRE Research, Q3 2026.
Leasing activity increased by 4% year-over-year in Q3 to 63.8 million sq. ft., the highest quarterly total since Q4 2024 and contributing to a 2% increase over the past 12 months to 244 million sq. ft. CBRE estimates that annual leasing activity will surpass 2022’s record level.
Vacancy Declines for Fifth Consecutive Quarter
The overall office vacancy rate fell by 60 bps year-over-year and 10 bps quarter-over-quarter to 18.2%, its fifth consecutive quarterly decline. The vacancy rate for prime office space fell by 250 bps year-over-year and 60 bps quarter-over-quarter to 11.9%. Notably, Midtown Manhattan's prime vacancy rate declined to just 1.9%.
Construction Completions Remain at Record Lows
Source: CBRE Research, Q3 2026.
Construction completions fell by 76% year-over-year in Q3 to 1.5 million sq. ft. Year-to-date completions totaling 4.7 million sq. ft. have 2026 on track for the lowest annual amount since CBRE began tracking this metric in 1990. The under-construction pipeline rose slightly to 20.1 million sq. ft. in Q3, largely due to new starts in Manhattan and Miami, but remained 84% below its Q2 2020 peak.
Rent Growth Accelerates at Fastest Pace Since 2016
Average asking rent increased by 3.1% year-over-year to $37.95 per sq. ft., the fastest pace since 2016 and well above the 30-year average of 2%. The spread between asking and taking rents narrowed slightly to 9.9% but remained above the 8.6% spread in 2019.
Office Investment Volume Continues To Rise
CBRE forecasts that annual office investment volume will increase by 10% in 2026 to $91.1 billion, based on strong activity in the first three quarters of this year. Private and institutional investors have increased their office holdings since 2023, although investment activity for the largest properties is 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, Q3 2026.
Contacts
Frank McCafferty
Executive Managing Director, Office Occupier Leasing, US & CAN Advisory Services
Related Research
-
The jobs AI threatens have mostly left the office already. The jobs AI supports favor in-office work.
-
U.S. office leasing accelerates in H2 2026 as tech demand surges and supply tightens driving vacancy lower and rent growth higher.
-
The attendance debate is over. The workplace investment debate is beginning. See what's driving the shift.