Looking for at least a sliver of good news in the U.S. office sector? Newmark provided some in its recently released fourth quarter 2025 Midwest Office Market Condition & Trends report.
But Newmark also warned that the Midwest office sector still faces challenges.
According to Newmark’s report, the Midwest office sector ended 2025 with its strongest momentum in years. A highlight? Net absorption delivered the first full year of positive demand since 2019.
Newmark said, too, that office leasing stabilized across major markets, vacancy edged lower and demand remained focused on higher-quality buildings. Sublease availability continued declining from its 2023 peak, which Newmark cited as an encouraging sign that market conditions are gradually stabilizing as tenants continue to commit to hybrid work.
The numbers back up Newmark’s optimism. According to the report, net absorption in the Midwest office market hit 390,000 square feet in the fourth quarter of 2025. That brought the Midwest office sector’s year-to-date absorption to 892,000 square feet. That might not seem like a huge number, but it is an improvement from the negative 6.1 million square feet of absorption in the Midwest in 2024.
However, there is a catch here. Newmark says that most of the positive net absorption of the fourth quarter came from Cleveland’s 1-million-square-foot Sherwin-Williams headquarters delivery. Without this move-in, the Midwest office sector would have positive negative net absorption in the last quarter of 2025.
The Midwest office sector’s overall vacancy rate ended the fourth quarter of last year at 22%. That’s a dip from 23.5% in the third quarter of 2025, but is slightly higher than the rate of 21.8% in the fourth quarter of 2024. Newmark cites this as the sign of a stabilizing but still oversupplied market.
The average direct asking rent in the Midwest office sector climbed to $28.18 a square foot in the fourth quarter, up from $27.52 in the third quarter and $27.16 from the fourth quarter of 2024. Chicago’s average asking rent of $34.59 a square foot led the region in the fourth quarter, while Minneapolis’ office market saw the second-highest average rent of $29.25 a square foot.
Some Midwest office markets performed far better than others during the last three months of 2025, Newmark said. Cleveland, for instance, saw more than 1.04 million square feet of positive absorption, while Detroit saw more than 722,000 square feet and Columbus more than 101,000 square feet. Minneapolis recorded 49,414 square feet of positive net absorption in its office sector during the fourth quarter.
But Chicago saw negative 644,000 square feet of office absorption during the fourth quarter, Cincinnati negative 148,000 square feet, Milwaukee negative 33,000 square feet and St. Louis negative 487,000 square feet.
