The U.S. office market recorded three consecutive quarters of positive net absorption through the first quarter of 2026 – its longest stretch of demand growth since mid-2022 – according to the Office Space Demand Forecast, Second Quarter 2026, released by the CREDA Research Foundation. However, leasing activity slowed in early 2026, and the report cautions that slowing economic momentum and heightened uncertainty may temper gains in the coming quarters.

Key Findings

• The office market has achieved its longest stretch of demand growth since mid-2022, though momentum weakened in early 2026 as leasing activity slowed.
• Office conversions and demolitions exceeded new supply by 3.0 million square feet in Q1 2026 – only the second time this has occurred in CoStar Group’s dataset going back to 2008 – helping reduce vacancy rates slightly.
• Combined with modest positive absorption over the last two quarters, the recent decrease in inventory has resulted in vacancy rates declining to 11.8% in the first quarter of 2026, down from 11.9% in the third quarter of 2025.
• Since the second quarter of 2024, the national office market has exhibited remarkably little net change in aggregate demand. This reflects how small gains in office use have been offset by tenants continuing to reduce their space.
• Demand remains focused on higher quality buildings, particularly in urban cores, where large tenants in tech and finance continue to anchor activity and support preleasing. New supply remains constrained by elevated construction costs and cautious capital.
• While GDP growth, low unemployment and strong consumer spending indicate continued expansion, elevated inflation and record-low consumer sentiment signal growing caution.
• Given the deceleration in economic growth and job creation and the recent slowdown in the office market recovery, net office space absorption over the last three quarters of 2026 is expected to total 31.2 million square feet, with another 30.1 million square feet of positive absorption in 2027.

“Despite a more cautious economic backdrop, the office market continues to demonstrate resilience,” said Marc Selvitelli, CAE, CREDA president and CEO. “Office conversions are contributing to a healthier market for office space and meeting demand for additional housing, while declining vacancies, constrained new supply, and strong demand for top-tier properties are helping to build momentum for the next phase of recovery.”

The report is authored by Hany Guirguis, Ph.D., dean, O'Malley School of Business and professor, economics and finance, Manhattan University, and Joshua Harris, Ph.D., executive director, Fordham Real Estate Institute, Fordham University.

Download the full CREDA Office Space Forecast: CREDAglobal.org/officedemand