There’s still a lot of improvement needed, but the U.S. office market is showing signs of continued improvement, with vacancy rates falling, leasing activity remaining positive and asking rents climbing in the nation’s top-tier properties, according to the latest research from Colliers.
In its third-quarter 2026 U.S. office report, Colliers reported that the national office vacancy rate fell to 17.7%, down 20 basis points from the previous quarter and 60 basis points from the same period a year earlier. Net absorption also remained positive for the ninth consecutive quarter, suggesting that demand for office space continues to recover even as the market works through lingering challenges.
Tenants absorbed 9.5 million square feet of office space during the third quarter, bringing year-to-date net absorption to 32.8 million square feet, according to Colliers. Nearly three-quarters of U.S. office markets recorded positive net absorption for the year.
Manhattan continued to lead the nation in office leasing and occupancy gains, recording 8.8 million square feet of net absorption through the first nine months of 2026. Other major markets also posted gains, including San Francisco, which recorded 2.6 million square feet of absorption, and Silicon Valley, where occupancy increased by 1.5 million square feet.
The improving numbers suggest that demand is returning to portions of the office market. But that recovery remains uneven, with property quality playing an increasingly important role in determining which buildings attract tenants.
Class-A Properties Drive Rental Growth
Colliers reported that the national Class-A vacancy rate declined 40 basis points during the third quarter to 20.3%. The Class-B vacancy rate also improved, falling 10 basis points to 16.7%.
Despite the higher vacancy rate among Class-A properties, rents at the top of the market continue to rise. Overall national asking rents increased 2.1% year over year to $38.15 per square foot, according to the report.
Average full-service gross asking rents for Class-A office space reached $43.83 per square foot nationally. Central business district Class-A rents averaged $52.20 per square foot, while suburban Class-A rents averaged $38.10 per square foot.
The differences between those segments also reflect contrasting rental trends. CBD Class-A asking rents edged down 0.6% from the second quarter, although they remained 0.1% higher than a year earlier. Suburban Class-A rents increased 0.7% quarter over quarter and climbed 3.8% year over year.
Manhattan recorded the highest average Class-A CBD asking rents at $85.72 per square foot. Miami followed at $84.49, with San Francisco at $77.40.
New Construction Remains Limited
Although demand is improving, new office construction remains constrained. Colliers reported that 26.4 million square feet of office space was under construction nationally at the end of the third quarter.
Development activity increased for the second consecutive quarter, with new projects totaling more than 4.4 million square feet launched across 18 markets. Still, persistently high construction costs mean that almost all new projects require significant preleasing before developers move forward.
Manhattan led the nation with 5.3 million square feet under construction, followed by Dallas with 3.6 million square feet. Palm Beach, Florida, had 2 million square feet underway, while Miami recorded 1.7 million square feet and Detroit 1.5 million square feet.
New deliveries remained modest. Only 2 million square feet of office space was completed during the third quarter, with just 19 markets recording new deliveries.
Limited Premium Space Shapes Leasing Decisions
The supply of desirable office space is also influencing tenant decisions. Colliers noted that a lack of large blocks of space in top-tier buildings is forcing more tenants to renew their existing leases rather than relocate.
That dynamic could help support occupancy and rental rates in sought-after properties, even as the broader office market continues to adjust to changing workplace needs.
For landlords and investors, the latest figures point to a market in gradual recovery rather than a uniform rebound. Positive absorption and declining vacancy rates offer encouraging signs, while limited construction may help prevent an oversupply of new space.
However, with national vacancy still at 17.7%, the market’s progress will depend on whether improving demand continues and how effectively office owners position their properties to meet tenants’ expectations.
