The U.S. office market remains a challenging one. But building owners who offer high-quality office space enhanced by amenities such as flexible meeting rooms, onsite food options, outdoor walking trails, onsite fitness centers and carved-out spaces for people to work in private? The vacancy rates in their buildings remain lower.
We recently spoke with Peter Miscovich, Global Future of Work Leader with JLL, about the continuing flight to quality in the U.S. office sector and what the hybrid work movement means for the future of this asset class.
Here is what he had to say.
Is the flight to quality still a strong trend in the U.S. office sector? And if so, what does “quality” mean to tenants? What features make an office a “quality” destination for tenants?
Peter Miscovich: Yes, the flight to quality remains a dominant trend in the U.S. office sector, fundamentally reshaping tenant demand and creating a bifurcated market where premium assets thrive while older properties struggle. JLL’s latest U.S. Office Market Dynamics, Q4 2025 found leasing continues to be highly concentrated in newer assets, highly-amenitized Class-A buildings, and vibrant Lifestyle Market ecosystems.
JLL’s recent Global Design Perspectives 2026 uncovered that organizations are pursuing high-performance spaces that advance business objectives while maintaining efficiency amid cost pressures, recognizing that thoughtful design has become central to value creation across real estate portfolios. This is also evidenced by the U.S. Office Market Dynamics research that notes that asking rent for buildings under construction increased by 14% year-over-year, and Q4 2025 saw the highest volume of leases executed with starting rents above $100 per square foot on record.
Modern tenants define “quality” through features that directly support their ability to attract employees back to the office under hybrid work models. Premium locations with excellent transit accessibility and proximity to amenities rank as top priorities. Advanced technology infrastructure has become non-negotiable, with 93% of investors agreeing that technology-enabled properties deliver stronger performance and returns. This includes hybrid-meeting-enabled conference rooms with intelligent cameras, robust digital connectivity, and flexible collaboration platforms.
Enhanced wellness amenities have shifted from nice-to-have to essential: upgraded HVAC systems with superior air quality filtration, abundant natural daylight, outdoor spaces, and fitness facilities. Designs that combine spatial patterns, environmental comfort and material finishes to create spaces that inspire and elevate human performance will be differentiators in 2026 and beyond.
A majority of organizations across all portfolio types are now willing to pay a premium for technology-enabled spaces, and this willingness is reflected in market dynamics where Trophy and Class-A asking rents grew by 68 basis points year-over-year, while overall asking rents declined by 35 basis points, demonstrating the clear bifurcation between quality and commodity space.
How important is offering a modern, amenity-rich office space for companies that are still trying to persuade their employees to return to the office in greater numbers?
Miscovich: Offering modern, amenity-rich office space has become critical for companies working to increase office attendance under hybrid schedules. At year’s end 2025, 97% of employees of Fortune 100 companies are now subject to hybrid or full-time office requirements, with fully flexible companies becoming exceptionally rare among major employers. With this shift, the quality of office space has become paramount.
With JLL research showing that 92% of corporations globally see workforce productivity as a key business objective over the next three years, and 63% of employees report feeling more productive in the office, organizations are examining what high-performance environments truly require.
In an increasingly digital world, genuine place-based connection has never been more valuable. 65% of people want the places they visit to provide ‘unique and distinct experiences’ and 62% want ‘connection to the local area or culture.’
The market is responding. The U.S. Office Market Dynamics research details how JP Morgan and Amazon, the largest office tenants in the finance and technology industries, respectively, added several million square feet to their footprints across major markets during 2025 after increasing attendance requirements. These expansions focused on high-quality, amenity-rich spaces that justify the commute.
However, JLL’s Workforce Preferences Barometer surveyed over 12,000 employees and reveals a significant mismatch between satisfaction and importance for holistic workplace outcomes. Elements like ‘being able to recharge’ or ‘feel inspired and creative’ are most closely correlated with people’s ideal work environments yet rank lower in actual satisfaction scores. Importantly, as people seek relief from 24-hour technology exposure, 61% of consumers globally report wanting digital detox spaces in the places they visit.
Organizations are willing to pay premium rates for spaces that demonstrably attract top talent and enhance collaboration effectiveness. When the office delivers exceptional experiences through superior technology, wellness offerings, purposefully designed collaboration environments, and spaces that support recharging and creativity, employees more willingly embrace structured hybrid schedules.
What does the flight to quality mean for older office properties? What will happen to older office space that is no longer as attractive today?
Miscovich: The flight to quality creates significant challenges for older office properties. Older commodity office buildings – particularly those with smaller floor plates, outdated mechanical systems, poor natural light, and inflexible layouts – are experiencing elevated vacancy rates and substantial downward pressure on rents. The market data confirms this bifurcation: while Trophy and Class-A rents increased 68 basis points year-over-year, overall market rents declined by 35 basis points.
In 2026, real estate leaders will be focusing on designing for the unknown and futureproofing assets for long-term flexibility. However, many older buildings lack the capacity for such adaptation. Over the course of 2025, almost 40 million square feet was removed from inventory for conversions or redevelopments, and overall inventory declined by 0.3%, the second consecutive year that U.S. office inventory has fallen.
Business planning agility was rated a key C-suite objective by 88% of organizations globally, underscoring that buildings unable to offer this adaptability face significant competitive disadvantages. Many older buildings simply cannot economically achieve the technology infrastructure, flexible layouts, and amenity packages that modern tenants demand.
Many older buildings are better suited for adaptive reuse, office-to-residential conversions, mixed-use redevelopment, or alternative uses. In 2026 the most successful spaces and buildings will be conceived as adaptive platforms ‘hardwired for flexibility,’ with design aimed at creating and protecting investment value through more unpredictable cycles.
The consolidation of office demand into fewer, higher-quality assets represents a fundamental reset of the sector, with properties unable to compete on quality facing prolonged vacancy or removal from inventory.
Many companies are still working under a hybrid work schedule. How is that impacting the amount of space that these companies need, and how is that changing the U.S. office sector?|
Miscovich: Uncertainty and change have become prevailing characteristics in real estate, as hybrid work models, AI integration and operational requirements can now shift within months rather than years.
The market reflects this transformation. The normalization of attendance policies in conjunction with aggressive rightsizing in the years following the pandemic have left many major occupiers in need of more space. However, companies aren’t simply returning to pre-pandemic space models, they’re fundamentally reimagining how space functions.
Organizations are moving away from the traditional one-desk-per-person approach to activity-based working, where employees choose spaces based on diverse work tasks. This shift is enabling companies to expand capacity without proportional space increases. Over the course of the pandemic, U.S. office tenants cut roughly 9% of their office footprints through downsizing, but continued to expand headcounts by roughly 5%, leading to a gap between office footprints and employee space needs. This gap is now driving expansion activity as return-to-office policies intensify.
Evolving technology requirements include designing for enhanced collaboration technology, immersive media and LED display walls, and increased computing demands from AI tools. This is particularly important as office attendance continued to incrementally increase to new post-pandemic highs with average weekly requirements rising from 2.8 days in Q4 2023 to 4 days for fully in-office employees and maintaining hybrid arrangements at 2.8+ days.
In workplace portfolios, company HQs will become showcases of innovative flexible and technology solutions, creating learning loops to inform the design of wider portfolios. This transformation is driving increased demand for flexibility in lease structures—shorter terms, expansion and contraction rights, and access to on-demand flex or coworking space. Flexible working patterns continue to evolve, with 85% of organizations identifying flexible work patterns as a key C-suite priority.
A large number of office leases are coming up for renewal soon. What does that mean for the U.S. office sector?
Miscovich: The large volume of office leases approaching renewal represents a pivotal moment for the U.S. office sector. Companies are making more informed decisions about space needs after years of hybrid work experience. Downsizing activity for larger expirations has fallen to negligible amounts, allowing a new expansionary cycle to begin.
Market momentum is strengthening: leasing activity established a new post-pandemic high in Q4 2025, and annual leasing grew 5.2% year-over-year. Large-scale transactions increased by roughly 15% year-over-year as companies are developing more confidence to execute long-term commitments to their workplaces. This signals that companies approaching renewals are increasingly willing to make strategic, long-term commitments rather than short-term placeholder arrangements.
For landlords of Class-A, amenity-rich properties, this presents opportunity. In 2026, success lies in designing experience journeys focused on personalization opportunities through touchpoints. Organizations increasingly prioritize ‘quality of space’ over ‘quantity of space’ driving companies to seek premium locations with advanced technology infrastructure, accessibility, enhanced wellness amenities and flexible workplace layouts.
The data confirms this flight to quality during renewals: leading markets for leasing included gateway markets like Silicon Valley (+36% year-over-year), Chicago (+33% year-over-year), and San Francisco (+27% year-over-year), suggesting companies are using lease renewals as opportunities to relocate to premium space in stronger markets.
For landlords of older buildings, this renewal cycle poses serious challenges. Organizations are placing greater emphasis on designing “in-between spaces” and capturing ROI for non-traditional workspaces, features that older buildings often struggle to accommodate. However, severe supply constraints may impact renewal dynamics: just 19 million square feet of office product is currently under development, more than 20% lower than the previous historical low in 2011.
Organizations are now willing to pay a premium for technology-enabled spaces, with 42-54% strongly agreeing they would pay premium rents for such properties across different sectors. This willingness is reflected in market performance where absorption is expected to surge in 2026, with 30-40 million square feet of positive net absorption, driving overall vacancy rates down by roughly 70 basis points.
2026 represents a pivotal moment—a convergence of cutting-edge innovation with sophisticated insights into human behavior and environmental response. How landlords, tenants, and investors navigate this renewal wave amid strengthening demand and constrained supply will substantially shape the U.S. office sector’s trajectory for years to come.
