According to CommercialCafe’s August 2026 national office report, the national office vacancy rate fell to 17.7% in July, down 130 basis points from a year earlier. At the same time, asking rents continued to inch higher, averaging $33.58 per square foot, up 2.6% from July 2025.
Is this combination of falling vacancy and rising asking rates a sign of better times on the way for the U.S. office sector? Maybe. But this sector still needs to work through several challenges.
CommercialCafe analyzed office buildings of at least 25,000 square feet for its latest monthly report. And in good news, the improvements in both vacancy and rental rates weren’t limited to just a small number of markets across the country. According to CommercialCafe, 19 of the 25 largest U.S. office markets tracked by the site posted lower vacancy rates in July than they did a year earlier.
Dallas is a good example. The Texas market’s office vacancy rate fell to 18.7% in July, dipping below 20% for the first time since 2023. CommercialCafe points to the area’s business-friendly policies, relatively affordable housing and expanding employment base as factors supporting office demand. Companies including KFC, Geico and Goldman Sachs also are making significant investments in the Dallas market.
The story is different in San Francisco, where vacancy remained close to 26%. Seattle wasn’t far behind, at 24.9%. These differences help highlight one of the realities of today’s office market: There is no single national recovery story. Instead, the market is separating into winners and losers, with high-quality buildings in strong locations attracting tenants and capital while older, less competitive properties continue to struggle.
But what about the office investment market? Are sales closing? Maybe not as quickly or as frequently as doing the sector’s heyday, but there are signs of life here, too.
Through July, office sales totaled more than $36 billion across 1,576 transactions, according to CommercialCafe. Manhattan led the country with nearly $5.2 billion in year-to-date sales, followed by Dallas at nearly $2.9 billion and the Bay Area at about $2.62 billion.
San Francisco provides another example of how complicated the recovery remains. Average office sale prices there climbed to $543 per square foot in July — second nationally only to Manhattan’s $575 per square foot. Yet that figure remains roughly half the market’s 2020 peak of $1,060 per square foot.
For Midwest owners and investors, Chicago is still the region’s dominant market. CommercialCafe reported that Chicago office asking rates averaged $28.38 per square foot in July, the highest among the Midwestern markets it tracked. More importantly, Chicago’s 17.8% vacancy rate was essentially in line with the national average.
Chicago also led the Midwest in investment activity. More than $1.2 billion worth of office properties changed hands in the market during the first seven months of 2026. The Twin Cities followed, though at a much lower $452 million.
And in a good sign for keeping the office vacancy rate under control, new construction activity in this sector remains sluggish. CommercialCafe said that about 29.5 million square feet of office space was under construction nationally in July. Boston, Manhattan and Dallas accounted for nearly 31% of that pipeline, with each market boasting more than 2 million square feet under construction.
That limited pipeline could prove important. With developers adding far less new office space than they did before the pandemic, improving demand has a better chance of translating into lower vacancy over time.
And then there is medical office, a subsector that remains one of the most active. CommercialCafe reported that medical office continues to look like one of the brighter spots in an otherwise challenged sector. An aging population, growing demand for health care services and the need for patients to receive care in physical locations all support the property type.